Monday, May 18, 2015

Washington, DC Metro Median List Prices Bounce Back 
 Get Preapproval

Washington, DC metro area list price of for-sale homes is inching upward, increasing 3.17 percent last month compared to May 2011, according to newly released data from May of 146 markets tracked by Washington, D.C.-Maryland, Virginia and West Virginia has seen a 5 percent increase in median list prices in May.

With the housing market warming up multiple offers is becoming more commonplace.  Buyers who want an advantage in the bidding process will need more than a prequalification, you will need a preapproval.

The difference is significant –

PREQUALIFYING for a mortgage is based solely on what you disclose to the loan officer or broker about your earnings, credit score and total assets, including what is available for a down payment.  It’s verbal — it doesn’t really mean anything, beyond providing some basic guidance on the range of prices you may be able to afford.

PREAPPROVAL, by contrast, requires borrowers to provide documentation of their income and their assets.   The lender typically pulls your credit report and score, and you should pull together all your documentation for the mortgage underwriting such as: W-2 wage statements, 1099s,  recent pay stubs; bank statements, statements from Individual Retirement and 401(k)s Accounts and other assets that could show you have the resources to buy and maintain a home.   It’s an opinion on your ability to borrow, not a guarantee to lend. You will need to have chosen a property and have it appraised before you can expect a firm commitment from a lender. 

Preapproval is carries more weight when you go to negotiate a deal.  It gives you bargaining power.

Buyers should aim for obtaining a preapproval letter from a lender within 30 to 60 days of the expected purchase date.  Some letters expire within 90 days depending on your lender.

Your income and bank statements may also need to be updated if it has been a few months between preapproval and the ratified contract for purchase, so get your preapproval today before you start searching for your dream home.