Real Estate Information Archive

Are you in the market for a home purchase in Albuquerque? One of the first steps (if not the very first) a buyer will take in the home buying process is getting pre-qualified and/or pre-approved. For many first-time home buyers, the difference between these processes is unknown, however, it is critical to understand the difference. In most instances, the current housing market climate is considered to in favor of the seller, making it crucial that buyers get pre-approved for their loan before making an offer on a home. That being said, there are also benefits to getting pre-qualified as well. Let’s take a deeper look at the differences:

Pre-Approval

You’ll need physical documentation of the following:

• Current Employment Status

• Income

• Person Assets

• Current Outstanding Debts

• Credit History

• Estimated Amount for a Down Payment

Think of it this way: if you have been pre-approved for a loan amount, you are legally able to offer that amount (or anything less than) on the purchase of a home. Once you have given all of your physical documentation to a lender, they will crunch the numbers and give you a physical notice stating both the amount you’ve approved for as well as a potential interest rate. Keep in mind that interest rates are fluid and change every day, so this amount is just an estimate. Getting preapproved is free and you can do it both online or in person.

Pros:

• It can’t be emphasized enough that it Is crucial to get a pre-approval BEFORE you begin putting offers in on homes. You can bet that a seller will not even consider your offer unless you have given proof that you are approved for that specific amount. If you haven’t been pre-approved, even those who offer less and have been pre-approved will almost always have their offer accepted over yours.

• Negotiation Power. When you know the maximum amount, you’re able to spend on a home, you’ll have the ability to negotiate more confidently with a seller on the offer itself as well as contingencies.

• A faster close. Closing on your home will be both a more swift and much faster process if the approval is already taken care of, giving less room for last-minute issues to arise.

• The actual searching part of the journey will be much easier if you can filter out any homes that aren’t within your approval.

Cons

• There is a one time hit on your credit score when you get pre-approved. However, this is only about 5 points and is very much worth it in the long run if you’re serious about purchasing a home.

• The approval only lasts for 90 days before you would need to get approved again. So, you want to make sure you are absolutely willing to make an offer and purchase a home before you get pre-approved.

If you are serious about buying a house, getting pre-approved is always the best option. No pre-approval and you can essentially guarantee you won’t find yourself with an accepted offer.

Pre-Qualify

You’ll need to know the following:

• Current Income

• All Current Debts

• All Personal Assets

Getting pre-qualified is a wonderful first step to take when thinking about buying a home. It’s free, easy and can be done in the comfort of your own home. Simply search almost any bank or credit union and they will have a pre-qualification application for you to take on their website. If you aren’t sure where to begin regarding searching for potential homes, this is where you can start to find your estimated price range, making it an ideal starting point for first-time homebuyers.

Pros:

• The process is free.

• There is no time limitation on your qualification.

• It won’t affect your credit score.

• It can help you get an idea of the kind of house you’ll be able to afford.

Cons:

• It is entirely an estimate. Due to this fact alone, neither a seller nor their realtor will take an offer seriously if the potential buyer only has a pre-qualification.

If you are interested in finding out about how much you could afford on a home but aren’t sure you’re ready to make an actual commitment, qualification could be the best option for you. However, the minute you are serious about searching and making offers, you NEED to get pre-approved!

Whether you’re looking to get pre-qualified or pre-approved, congratulations! You’re taking the first step in the home buying process…and the Sandi Pressley Team is here to assist you every step along the way!

HOT ALBUQUERQUE LISTING OF THE WEEK

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Looking for the perfect home for sale in Albuquerque? Our easy-to-use home search tool can help you start the process. Join us twice a week on our blog for more real estate advice and great reasons to buy a home in Albuquerque and the surrounding area. Follow us on Facebook for the latest Albuquerque real estate updates.

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Utilizing your Albuquerque home's equity can be a strategic financial move under the right circumstances. Home equity, the portion of your home's value that you own outright, can be a powerful asset when used wisely. Here are some scenarios where tapping into your home equity makes sense:

Home Improvements and Renovations

Investing in home improvements can not only enhance your living experience but also potentially increase your home's value. Projects like kitchen remodels or adding an extra bathroom often offer good returns on investment. Before proceeding, consider the potential value addition against the cost and ensure the improvements align with your long-term housing plans.

Debt Consolidation

If you're juggling multiple high-interest debts, using home equity to consolidate these into a single, lower-interest loan can be beneficial. This move can simplify your finances and save you money in interest over time. However, it's crucial to avoid accumulating new high-interest debts afterward.

Education Expenses

Funding education can be a significant expense. Using home equity to cover tuition fees or other education-related costs can be a cost-effective alternative to student loans, especially if the interest rates are favorable.

Emergency Fund

In times of financial emergency, such as unexpected medical bills or job loss, your home equity can provide a safety net. It's advisable to have other emergency funds in place, but home equity can serve as an additional buffer if needed.

Investment Opportunities

If a promising investment opportunity arises, using your home equity to invest can be a way to grow your wealth. This could include purchasing a second property or funding a business venture. Ensure that the potential returns justify the risks involved and that you're not over-leveraging yourself.

Retirement Planning

For long-term financial planning, such as retirement, your home equity can play a role. Whether it's downsizing to release equity or taking out a reverse mortgage, it's important to consider how your home equity fits into your overall retirement strategy.

Before tapping into your home equity, it's essential to weigh the pros and cons. Consider factors like current interest rates, your financial stability, and your long-term goals. Consulting with a financial advisor can provide personalized guidance based on your situation.

Remember, using home equity means putting your home on the line as collateral. It's a decision that should not be taken lightly, as defaulting on the loan could result in losing your home. Therefore, it's crucial to have a solid repayment plan in place.

In conclusion, using your home's equity can be a smart financial strategy, but it requires careful consideration and responsible management. Ensure that you're using it for purposes that will enhance your financial position and align with your future plans.

For more detailed information on using home equity and to explore the best options for your circumstances, consider reading further on the subject from reputable sources such as Forbes Advisor and Quicken Loans.

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Learn More!

Looking for the perfect home for sale in Albuquerque? Our easy-to-use home search tool can help you start the process. Join us twice a week on our blog for more real estate advice and great reasons to buy a home in Albuquerque and the surrounding area. Follow us on Facebook for the latest Albuquerque real estate updates.

Get your Morning Inspiration with the Sandi Pressley Team!

Being underwater on your mortgage for your Albuquerque home, where the balance you owe is greater than the value of your home, can feel like a daunting and isolating experience. However, it's important to remember that you have options and there are strategies you can employ to navigate this challenging financial situation.

Refinance Your Mortgage

Refinancing could be a viable option if you're eligible. This process involves taking out a new mortgage with better terms, which could lead to lower interest rates and monthly payments. It's essential to consider closing costs and how long you plan to stay in your home before deciding if refinancing is right for you.

Loan Modification

A loan modification is a negotiation process with your lender where you can discuss altering the terms of your loan. This might include extending the duration of your mortgage, reducing the interest rate, or even forgiving a portion of the principal. Each lender has different policies and programs for modification, so direct communication is key.

Short Sale

In a short sale, you sell your Albuquerque home for less than the outstanding mortgage balance with the consent of your lender. This can be a complex process that requires approval from all parties involved, including potential buyers and any secondary lenders if you have more than one loan on the property.

Deed in Lieu of Foreclosure

Offering a deed in lieu of foreclosure means voluntarily transferring ownership of your property to the lender as an alternative to foreclosure. While this can relieve you from the mortgage debt, it's important to understand that it may have tax consequences and impact your credit score.

Seek Legal Advice

Consulting with a real estate attorney or financial advisor can provide valuable insights into your situation. They can help you understand the legal implications of each option and guide you towards making an informed decision.

Government Programs

Investigate government programs designed to assist homeowners in distress. Programs like HARP (Home Affordable Refinance Program) or HAMP (Home Affordable Modification Program) may offer solutions if you meet their eligibility criteria.

Budgeting and Financial Planning

Take a close look at your finances and consider creating a budget that accounts for your reduced home value. Financial planning might also involve prioritizing expenses, cutting non-essential costs, and exploring additional income streams.

Remember, being proactive is crucial when dealing with an underwater mortgage. Explore every avenue, communicate openly with your lender, and seek professional advice to find the best path forward.

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Learn More!

Looking for the perfect home for sale in Albuquerque? Our easy-to-use home search tool can help you start the process. Join us twice a week on our blog for more real estate advice and great reasons to buy a home in Albuquerque and the surrounding area. Follow us on Facebook for the latest Albuquerque real estate updates.

Get your Morning Inspiration with the Sandi Pressley Team!

When you get a mortgage to buy a home in Albuquerque, you are taking out a long-term loan. Mortgages are used to finance the purchase of a home. As well as repaying your principal, you make interest payments to your lender. Your house and land serve as collateral for the loan. A mortgage consists of two basic components: principal and interest. The following sections describe what they are and how they impact you as a borrower.

What is a Principal Payment?

As a borrower, you will initially borrow a certain amount of money, which is called the principal. You calculate your principal by subtracting the final selling price of your home from your down payment. Your budget and how much home you can afford are determined largely by your principal. 

As soon as you borrow money, interest begins to accrue. Mortgages are typically paid in monthly installments over a 15- or 30-year period. The outstanding principal on your mortgage refers to how much you still owe.

Interest on a Mortgage

Mortgages don't just require you to pay the principal each month. You also pay interest. A lender charges you interest to let you borrow money. The interest rate is determined by a percentage. The money you pay each month goes toward your principal and interest, and the two are combined into a single payment to your lender.

Does Your Mortgage Principal Change?

With most home loans, your monthly payments don't change despite paying down your principal over time. However, you will end up paying less interest over time. 3% of a smaller remaining principal, for example, is going to cost you less than 3% of your entire principal when your loan is processed. Even though your payments remain the same, you're putting more toward your principal. 

Payment changes could occur on rare occasions. Getting an adjustable-rate mortgage is one example. Home loans come in two varieties. The first is adjustable-rate and the second is fixed-rate. Your interest rate will remain the same throughout the term of your loan if you take out a fixed-rate loan. A variable-rate mortgage has periodic rate changes. If the rate goes up, so do your monthly payments.

After you get enough equity in your home, your lender will cancel your private mortgage insurance, so your payment may change.

Refinancing means replacing your old mortgage with a new one. Therefore, you'll have a new interest rate, monthly payment, and term length on the new one. When you refinance, your principal could change, but it doesn't have to.

Last but not least, you can pay more toward your mortgage than the minimum. You can either make a monthly payment or a lump sum payment. When you make extra payments, you reduce your principal, so you can pay less in interest every month.

When you reduce how much you pay in interest, you get lower monthly payments.

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Contact us today to help you buy or sell your next home in Albuquerque. Looking for the perfect home for sale in Albuquerque? Our easy-to-use home search tool can help you start the process. Join us twice a week on our blog for more real estate advice and great reasons to buy a home in Albuquerque and the surrounding area. Follow us on Facebook for the latest Albuquerque real estate updates.