Whether you are new to the mortgage process or a veteran of the industry, the terms used in the initial steps of getting a loan can at times be confusing and misleading. Understanding the difference between a pre-qualification and a pre-approval helps determine how much house you can afford, and if you are qualified to get a loan. Below, we break down the difference between two very similar and equally important terms:
The pre-qualification is a less involved process than the pre-approval and can be done over the phone or online. As the borrower, you provide the lender your overall financial picture including debt, income, and assets. It does not involve an analysis of your credit report or a close look at your ability to purchase a home. The pre-qualification letter allows you to explore your mortgage options with a lender and ask any initial questions.
A pre-approval letter comes from the mortgage company you are working with and is essentially a commitment that you have a loan approved for a certain amount of money. This letter is required before a full mortgage loan approval and includes the following:
- Credit check
- Income/employment verification
- Financial obligations such as credit card balances
- Copies of W-2s and bank statements
Once you are pre-approved, you can move forward with looking for a home knowing you have a conditional commitment. This gives you leg up on an offer from somebody who has not been pre-approved.
A lot can change between buying your first home and downsizing to a home you’ll enjoy during retirement. Chances are it will be your last big move and you want to make sure you get it right. Consider the following tips for finding a retirement home that best fits your needs:
Location For Years to Come:
There’s a good chance you want to stay near your family and friends, but you should also consider a location that will allow you easy access to amenities. Finding a home near grocery stores, shopping malls, or public transportation options will serve as a convenience in later years when mobility becomes more of a challenge. You might also have a certain hobby you enjoy, like playing golf or going to the beach; consider the time it will take to get to these places when choosing your home for retirement.
Omit the Stairs:
Even if the idea of struggling to climb a flight of stairs seems years away, you might look for single-story homes to eliminate this inevitable nuisance. If you are thinking of new construction, then take the opportunity to implement features like wide doorways and walk-in showers so you are guaranteed a smooth transition into your later years.
How Much Space Do You Need:
This applies both inside and outside. Do you need or want a large yard that is going to require continued maintenance down the road? Even if you enjoy yard work, make sure you find a home with manageable outdoor space that won’t become a hassle later on. For inside, consider the amount of rooms and square footage you’ll be cleaning and taking care of. Do you still need extra guest rooms and a formal dining room?
Plan for Financing:
At this stage of your life, you might be able to afford a large down payment, or even pay off a mortgage outright and eliminate your expenses. Even though nobody wants to have a mortgage, sometimes it is necessary to give yourself the flexibility to live the life you want and have worked so hard for in retirement. No matter your current circumstance, always be sure to plan for the unexpected.
By considering these helpful tips, hopefully you will have a thorough understanding of just what kind of house you need to enjoy your retirement years and beyond.
Would you share some of your background and personal story?
Like a company, the balance sheet can never tell the entire story. In 1985, my mother took four children in the middle of the night to escape Vietnam for a better world. My father never made it on the boat. He was caught and put in jail, which was very much like a concentration camp. On that same night, our boat was met by Communist guards before we entered international waters and everyone on the boat offered up their valuables to earn our escape. It worked, and they let us go.
The following day, we were robbed by Thai pirates. Since we had already given everything away, they retaliated by killing many people on the boat, including my mother, and three-year old baby sister. The pirates took their six boats and continuously rammed our fishing boat until we were slowly sinking. Holding onto a wooden board to stay afloat, we were eventually rescued by an oil driller and brought to Galang Island, a refugee camp in Malaysia.
Luckily, my aunt, my father’s sister, was also on the same boat, and became our legal guardian at the refugee camp. She has six children of her own, and a niece and nephew from her husband's side of the family. Together we were sponsored by her husband who escaped in 1981, and eventually traveled to Salt Lake City, UT. In 1986, when the family heard that there was mill and factory work in Worcester, MA, we packed up to travel there and have stayed ever since.
I went through the Worcester Public School program, and graduated valedictorian of my high school, Class of 1996. With the help of my guidance counselor (since my family members didn't know what further education was), I was accepted to Brandeis and graduated in 2000. I was originally on a path to attend medical school, but later switched my interest and ended up in law school.
How did you find your path to becoming an attorney?
For me, becoming an attorney was accidental. As a Vietnamese immigrant, the elder generation always associated attorneys with liars and cheaters, and so it was never anything I thought to pursue as a career. After graduating Brandeis University in 2000 with majors in Neuroscience, Psychology, and Economics, I eventually realized I no longer wanted to go into the medical field.
In 2003, I got my real estate license and worked towards obtaining my real estate brokerage license in 2005. From there, I established LeHong Real Estate & Business Brokerage. In the years following, I purchased several businesses and decided to enter law school as a part-time night student at Western New England School of Law in order to better protect myself and my investments.
Quickly into my second year of law school, I realized I could see myself practicing law as a career. In 2010, I graduated with my JD/MBA and sold everything to start my own law practice.
Who do you consider your mentors?
My mentors have always been my educators, beginning with Mrs. Dowd, who taught me English in ESL class at Granite Street School. Then my guidance counselor in high school, Mr. Dowd, helped me apply to college and exposed me to the possibilities of higher education. At Brandeis, Professor Kalpana White not only mentored me in the biology lab, but outside of the classroom as a human being. I still call her for advice today.
What are some of life’s most valuable lessons that you apply to business?
I have learned that hunger develops a drive, but it’s important to make sure this drive keeps you on an ethical path. Having a JD is actually a double-edged sword because you can use it towards helping people or hurting them. I work hard to make sure the path I take is clear, and that billable hours don’t dictate important decisions.
Everything I do as an attorney has long-lasting effects on families and I find more value in that than using my JD to serve myself personally.
What are some of your passions outside of work?
Life is about giving back, and I have always wanted to leave the world a better place than I found it. I am inspired by my mother’s sacrifice and the educators who helped me get to where I am today. I currently serve as the board president for the Southeast Asia Coalition, which I have been part of for five years, and have aided in the service of over 10,000 immigrants like myself. I am also the VP of the Vietnamese Business Association of Massachusetts and work to grow the community and help mentor those in need of business assistance.
What do you value about your partnership with Kristen Walther?
Since meeting Kristen by chance through a mutual loan transaction, she has become much more than a business partner; I consider her both friend and family. I can call her in the middle of the night for advice on family issues, and she is always there to answer. This relationship and willingness to go beyond the parameters of a traditional business partnership has founded a loyalty and trust that can’t be matched.
If you are ready to list, but are worried about giving buyers the best first impression of your home, there are several ways you can upgrade curb appeal without spending a lot of money. Here are some great ways to clean up your home’s outward appearance without going broke!
Simple lawn upkeep is a DIY task that can add instant curb appeal. Keeping the grass cut regularly, trimming any bushes, and weeding flower beds will indicate that you have cared for your home inside and out. For a professional look you can even edge your lawn.
Paint the Front Door:
Make your front door pop and welcome guests with a color that contrasts to the front of your home. A gallon of paint costs as little as $25 dollars. A simple Google search of what color front door for a, (insert house color here), will give you lots of visual suggestions. You can also consider adding fancy house numbers, hanging a decorative wreath, or putting potted plants on the front step.
Wash the Dirt Off:
Simply use a garden hose on the strongest setting to get dirt and debris off walkways and siding. You can rent or borrow a power washer for any tough areas, but be sure to avoid the windows! Taking a scrub brush with bleach to any tough lime stains on stone or patio surfaces will also help clean up the look of your home for potential buyers.
Clean the Windows:
Start by cleaning the inside with Windex or other household cleaners. For outside, you can use your hose to spray off cobwebs or use a long-handle brush to scrub them clean. You might need to enlist the help of a neighbor and use a tall ladder, but cleaning both the inside and outside of your windows will make your home sparkle.
There are so many affordable options for exterior light fixtures these days you might consider investing a little to upgrade the look of your home. Any outdated front door or garage fixtures should be replaced. If you don’t feel like spending money on new fixtures, you can always touch up the paint on the existing ones, replace the bulbs for consistent light, and make sure the glass panels are all clean.
By completing any or all of these affordable upgrades, your home will stand out to potential buyers from the minute they drive up for their first look.
Today’s market has buyers bidding against each other for a low inventory of desirable homes. As if the prospect of buying a home wasn’t stressful enough, waiting to find out if your offer was accepted can heighten the emotions and make the waiting unbearable. Luckily, there are things you can do to better your chances of winning a bidding war.
Use a Pre-approval Letter:
A pre-approval letter is different than being pre-qualified. A pre-qualification verifies your income and how much your bank might lend you based on your credit. A pre-approval letter means that your lender has essentially underwritten your application and it is simply pending an appraisal. Submitting your financing documents to your lender before making any offers will allow you to act quickly when you are ready to make an offer on a new house.
Start with Your Best Offer:
You only get one chance to make a good first impression, which is why you should submit your best offer up front if possible. By doing your research and determining the value of comparable homes in the neighborhood, you can present an accurate and competitive offer. In an extremely competitive market, most houses will sell for over the asking price, so be sure to factor that into the price of the home you are considering.
Limit Your Demands:
Sellers want clean offers; not those that come with a lot of demands or contingencies. For example, if you can avoid asking the seller to cover your closing costs, or trying to get them to make repairs as part of the negotiations, you might have a better chance of having your offer accepted. Sellers have the advantage in a multiple-bid situation and the less complicated you make yours, the more likely they are to say yes.
Give the Seller More Time:
If you can be flexible with your moving timeline, it might give you the competitive edge to offer the seller more time to move out of the home. Not only will they be selling at a price they are comfortable with, but they now have the added bonus of making their own move less stressful. You can offer to have the seller rent back the home for a period of time, or push back the closing date.
Make it Personal:
It may seem silly, but some buyers are swayed by the personal touch of a hand written letter expressing why their home is perfect for you. You can introduce yourself in the letter, tell the seller all about your family, the things you love about the house, and the memories you hope to create there. If the seller is sentimental, they might appreciate the personal touch you’ve added to your offer and feel better knowing who is going to be living in their home.
Stay in Touch:
Even if you find yourself on the losing end of a bidding war, have your realtor keep in touch. A lot of things can happen between an accepted offer and the actual closing. If your offer was in top consideration, you might win out in the end should the initial buyer have complications