A home mortgage is typically the largest monetary transaction most people participate in personally in their life. While some purchasers are able to buy a home with cash most people are not and therefore need some type of mortgage. Homebuyers often are in a dilemma regarding whether to use the services of a mortgage lender or a mortgage broker.
- A mortgage lender is the financial institution or bank that issues mortgage loans directly to the homebuyer.
- The mortgage broker is an intermediary (middleman) between the homebuyer and the mortgage lender. Mortgage brokers generally charge 1%-3% of the loan amount as a fee for their services. Some mortgage brokers may charge a flat fee for their services.
- The homebuyer is encouraged to do thorough research and ask questions of qualified professionals when deciding which type of mortgage professional will be right for them.
Items Needed for Pre-Approval
The homebuyer should obtain from their chosen mortgage professional a complete list of items needed for pre-approval. The list of items they request from you may contain all of the following which may be assembled prior to the first meeting with the mortgage professional.
- Copy of driver’s license and social security card or passport of all people who are applying for the loan
- W2’s and tax returns for the past two (2) years
- Pay stubs for the past thirty (30) days
- Previous three (3) months bank account statements including all pages on checking, savings, mutual funds, CD’s, brokerage accounts etc.
- Most recent statements of 401K, IRA (asset bearing accounts).
- Documentation on any other income you wish to have considered (rental income, part-time income, support/maintenance income)
- Contact information about landlord (if you have been renting) including name, address, and telephone number
Real Estate Brokerages
When homeowners decide to sell their home it is typical for them to discuss whether they want to have someone else sell their home for them or whether they want to try and sell it themselves. If they wish to sell it themselves they can place it “For Sale by Owner”, which is commonly known as a FSBO. If they decide they need professional assistance selling their home there are two types of real estate companies for consumers to consider:
- Transaction based (also called flat fee or limited service) real estate companies
- Traditional real estate companies.
- Transaction based real estate companies are real estate companies who typically provide a limited (specific) set of services to the homeowner for a flat fee or fee for service menu.
- Traditional or full service real estate companies offer a comprehensive package of services to consumers for a negotiated commission.
Every homeowner should ask themselves the following questions when determining whether they want to sell their home without the services of a real estate agent.
- Do we have time to spend marketing and showing the home?
- Who will be responsible for showing the home?
- How many open houses will we need?
- How will we reach potential buyers?
- Who will be responsible for negotiating with the buyer’s agent?
- Do we know what our competition is selling for?
- What needs to be repaired?
- What price should we sell for and why?
- Do we know the appropriate disclosures we have to make to the buyer?
- Do we need a marketing plan or just a sign in the yard?
If the homeowners’ decision is to use a transaction based real estate company their next step would be to contact one of the transaction brokerages in their area and get a complete menu of their services and fees. Homeowners should also have a thorough understanding of what is required of them from the transaction company.
If the homeowners decide that they are better served pursuing their own profession and they wish to use the services of a traditional full service real estate agent the next step for them would be to hire a real estate listing agent.