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Many lenders pre-qualify or pre-approve mortgage applicants, which can help considerably in the buying process. While the terms are often used interchangeably, there are some important differences to note.

In general, pre-qualification is considered an initial step in which the applicant provides information on income, assets and debts. The lender may or may not require documentation.

Pre-approval is considered the next step and requires documentation and a credit check. A hard credit inquiry can affect your credit score, and several by different lenders in a short period of time can cause your score to take a significant hit. If you’re thinking about getting pre-qualified or pre-approved for a mortgage, ask if the company will perform a hard credit inquiry and decide if you are willing to risk the potential impact on your score.

Reasons to Get Pre-Qualified or Pre-Approved
Getting pre-qualified or pre-approved for a mortgage before you begin house hunting can help you throughout the whole process. It can save you time and can help you avoid frustration and disappointment later. This is because you can start your search with a reasonable estimate of how much you will be able to borrow. That means you can focus on houses in your price range, rather than falling in love with a house and then finding out that a lender will not loan you enough money to buy it.

If you have found the house of your dreams and want to make an offer, you need to show the owners that you are serious. That means you need to be able to demonstrate that you’re able to qualify for the mortgage you need to buy the house.

Some homeowners may only be willing to sell to buyers who’ve been pre-approved for a mortgage, while others may be willing to accept an offer from buyers who’ve been pre-qualified. In some areas, one is more widely accepted than the other. Ask your real estate agent whether being pre-qualified or pre-approved is more likely to help your chances of having your offer accepted.

Obtaining a Mortgage
Being pre-qualified or pre-approved does not necessarily mean that you’ll be approved for a mortgage by that lender. The company may require additional documentation to process your mortgage application and may learn more facts that influence their decision. Getting pre-qualified or pre-approved by a particular company does not mean that you’re obligated to obtain a mortgage from that lender. You can and should shop around for the best terms.

Published with permission from RISMedia.

Once your home is listed in the Multiple Listing Service (MLS), the listing broker discloses the terms of the commissions to other competing brokers so they will bring their buyers to the listing. When the buyer’s broker presents a contract to the seller, it will include a provision to collect their share of the sales commission, as offered by the listing agent in the MLS.

Published with permission from RISMedia.

Here are a few tips for designing an area that does far more than hold your wardrobe.

Strategic Storage

Open shelving allows you to take stock of everything with a glance.

Take a Seat

Be it an ottoman or chaise lounge, have a place to sit when trying on shoes.

Mirrors Galore

Youll need a full-length mirror or two to see how you look, as well as a separate vanity.

Center Island

An island in the center of the dressing room can be used for display and additional storage.

Keep It Light

Shelves with LED lights provide the feel of a showroom, helping to distinguish colors.

Published with permission from RISMedia.

Home insurance may be one of the last things youll think about when buying a home, but in some situations, insuring your biggest asset isnt so easy. And without insurance, you wont be able to qualify for a home loan.

Here are five things that can make getting home insurance difficult, or at least more expensive:

1. A lot of claims: A long list of insurance claims at an address by previous owners can increase insurance rates. For an insurer, too many claims can mean theres an underlying maintenance problem that needs to be fixed, and its likely a big one. You can find out how many insurance claims were filed at the home in the last five years by buying a Home Sellers Disclosure Report from the Comprehensive Loss Underwriting Exchange.
2. Natural disasters: If the home is in an area where natural disasters strike, then youll probably need to buy extra insurance because the basic homeowners policy wont cover it. That extra insurance may be expensive, though you might be able to mitigate it by taking certain precautions, such as installing storm shutters in a hurricane zone, for example.
3. Old homes: Just like us, homes wear out with age. Old pipes and electrical systems can break, and an insurer may deny coverage until such things are updated. Or they may charge more for homes where some items may not be up to current building codes.
4. Backyard fun: A pool or trampoline in the backyard can be listed by an insurance company as an attractive nuisance for neighborhood children to get into while youre away. An injury or death in that situation would be horrible enough, and you could also be held liable in a lawsuit, meaning your insurer would likely have to pay up. Putting a fence and other precautions around them can help protect you, but insurers may still be wary and charge higher rates.
5. Vacant homes: If you buy a foreclosed or vacant home, theres a chance that pipes and other parts of the home can fall apart faster or be destroyed by vandals or evicted owners. This could lead to repairs being done before you can move in, possibly requiring extra insurance to cover vandalism, fire or other risks that can occur when a home remains empty.

If youre faced with any of these issues, remember that you can probably still find an insurance company that will cover you if you cant resolve them. The rates may be higher than normal, but at least youll be covered.

Published with permission from RISMedia.

If you’re having trouble paying your mortgage, programs are available to help homeowners in situations like yours keep their houses or avoid foreclosure. Don’t wait to ask for help.

Talk to Your Loan Servicer and a Housing Counselor
If you can’t pay your mortgage on time, contact your loan servicer. Explain the reason for the problem and whether you expect it to be resolved soon, or whether it’s permanent, so that the lender can offer options to help.

You can also seek guidance from a housing counselor approved by the Department of Housing and Urban Development (HUD). He or she can tell you if you qualify for a government assistance program, help you choose the best option offered by your mortgage servicer, make a budget and resolve credit card debt or other financial problems that are making it difficult for you to afford your mortgage.

Options to Get Back on Track
You might be able to refinance your mortgage by taking on a new loan with a lower interest rate or switching from an adjustable to a fixed rate. You could also modify the terms of your existing loan by lowering the interest rate. A loan modification may be temporary, but refinancing permanently changes the terms of the loan. Your credit score and amount of equity will affect your options.

Your lender might offer you a repayment plan so that you can postpone payments in exchange for making higher payments later. Before you agree to a repayment plan, be sure you understand the terms and can meet them.

If you have suffered a hardship, such as a job loss, a natural disaster, or an illness or injury that prevents you from working, your lender may offer you forbearance. You might be able to make lower payments or skip your payments for a period of time until your financial situation improves.

Ways to Avoid Foreclosure
If you’re in dire straits, you might be able to walk away from your home and avoid foreclosure through a short sale. Your loan servicer could agree to sell the house and accept the price received, even if it’s less than the amount you owe. In some states, the loan servicer can sue the homeowner for the difference between the amount of money received in a short sale and the amount owed (the deficiency), unless the homeowner obtains a written waiver of deficiency. Check your state’s law before you agree to a short sale.

Another option is a deed-in-lieu of foreclosure, in which you turn over your house to the lender to avoid foreclosure and damage to your credit score. If you would be held responsible for a deficiency in your state, request a written waiver. You might qualify for help with relocation expenses.

Ask for Help
If you’re struggling to pay your mortgage, your situation may seem bleak, but you have options. The first step is to contact your loan servicer and be honest about your situation so that your lender can help you find a solution.

This article is intended for informational purposes only and should not be construed as professional or legal advice.

Published with permission from RISMedia.