Shari Marquis' Blog
530 White Cliff Dr, Plymouth, MA 02360
As you enter the home buying process, some people may recommend that you seek mortgage pre-approval. This is typically one of the first steps in the process, and you may view it as something you have little choice over. Yet mortgage pre-approval is not a requirement to start shopping for a house, and it does have a few potential drawbacks to consider. As you make the choice about pre-approval, take time to weigh the pros and cons.
Benefits of Mortgage Pre-Approval
Mortgage pre-approval does two big things for buyers. First, it shows you how much your lender thinks you can afford to spend. This can help point you towards homes that are in your budget. Of course, it’s possible to be approved for more money than your actual budget allows you to spend, but it is a good starting point for budgeting for your home purchase.
Second, mortgage pre-approval gives you strong negotiating power if you make an offer on a home that already has several offers. When a seller sees that you have financing approved, you are a more attractive buyer than someone who does not. There’s always a risk that the seller won’t be able to secure financing, leaving the seller back at the starting gate without a sale.
Drawbacks of Pre-Approval
So if pre-approval strengthens your negotiating position and helps with budgeting, why wouldn’t you want to move forward with it? There are some drawbacks to pre-approval to consider, and the biggest is its impact on your credit rating. Pre-approval requires the lender to pull your credit, and credit pulls do impact your credit rating. If you don’t move forward with the loan using that lender within 120 days, you will need to go through the process again. Multiple credit pulls will lower your credit rating slightly.
A second drawback is the false sense of security that comes with mortgage pre-approval. While most buyers who are pre-approved can get their home loan as outlined in the pre-approval, it’s not a guarantee. It’s possible for mortgage lenders to pre-approve a home loan, only to decide later that the borrower or the home represents too big of a risk. This is a rare occurrence, however. For most buyers, pre-approval is a strong indication that financing will receive approval as well.
Do You Need Mortgage Pre-Approval?
For most buyers, mortgage pre-approval is a good step to take because it provides budgeting guidance and negotiating power. However, it’s not without its drawbacks, and you should understand those as you move forward. To decide the right choice for your needs, discuss your unique buying situation with a qualified real estate agent.
26 Whimbrel Drive , Bourne, MA 02532
26 Whimbrel Dr, Bourne, MA 02534
Buying land can be a tricky matter for many people, especially when they're first getting started. No matter how valuable a property may seem at the time, it may not take very long to realize there were more strings attached than you thought. But while there are a few red flags to keep in mind, you don't have to let your nerves get the better of you. Before signing a contract, here are a few facts to keep in mind.
Chances are, you've likely already confirmed that the land has been zoned for building, but what you may not have considered is the extent of the zoning laws. Building in certain neighborhoods may be difficult to do, depending on the size and configuration of the property. You also may want to consider how future laws will affect your building. For example, if the neighborhood is likely to pass new laws to protect the environment, you need to keep in mind the expense and effort of compliance. Zoning hiccups may not prevent you from buying the property, it can just help you prepare for what's ahead.
The State of the Land
If you're buying property, you need to do more than just look at the site. You need to know if the soil has been contaminated while the land sat vacant, how fast the tree roots are growing, and whether the ground can support certain infrastructure. If the roots are moving close to the property site, you'll need to factor in the cost of removal. Buyers should also consider how the sunlight (or lack thereof) will affect the eventual inhabitants. If there are sun-blocking hills near the area, it could significantly reduce the demand of the property.
If you're looking for a bargain, it's likely going to come in the form of a fairly undesirable neighborhood. Building in an area like this may pay off in spades, or it may end up being a major mistake. Some people will jump on neighborhoods that are "up-and-coming" only to find that the wind changes direction soon after buying. Or they find that it takes too long for the neighborhood to become valuable. You need to think about what you'll do if you can't sell for the price you want (e.g., rent, etc.). Not every developer can wait a decade or more before the market shifts.
Buying land can be a great way to both meet the housing demand in an area while generating profit for you. The key is to consider the most common scenarios (and problems) that may occur before moving forward.