I know… I know… PreQualifications are part of my job as both a Realtor AND a Mortgage Broker - especially when I am acting as both in a transaction.

The point isn’t that I don’t want to do my job… the point is more about practicality.  It is a GREAT TIME TO BUY! and that is not just a sales line.

Here is a simple step by step guide to PreQualifying YOURSELF so you can be better informed as a buyer and proceed into a real estate transaction with some level of comfort.

Step 1

CREDIT… go pull a FULL and COMPREHENSIVE credit report with scores.  You need the middle score.   “Beacon” means nothing.  You need to go to a quality provider of credit reports.

I don’t usually recommend anyone in particular but what the banks and credit card companies provide is NOT adequate.  Try www.privacyguard.com and they can also put up alerts for you.  www.lifelock.com is also good.

DEBT… your credit report shows how much DEBT you are carrying!

Step 2

Assets… start looking at how much you can put down on a property.

The days or the TRUE 100% financing are gone.  Also, prequalifying for a loan over 80% is harder than ever.

What a lender wants to see:

• A Pattern of Savings - if you are making $100,000/yr you theoretically should have more than $10.17 in your checking accounts… you should have saved something
• Deposits - you need to prove that you have the money to put down in the first place!
• Escrows - yes they will want to know up front that you can pay the escrows at the table
• Closing Costs - same
• Reserves - unless you are getting an FHA or USDA loan, you really need to show that you have a little cushion

Step 3

Income … gone are the days that a $25,000/yr bank teller can buy a $250,000 house.  10 times income does not work no matter how you push it.

1. The bank will call your employer to make sure you are employed or verify with an accountant if you are self employed.
2. Tax returns are the key these days as Full Documentation reigns.
3. Just think of it this way…most qualifications work out that you can afford to spend 1 week of your monthly salary on your house payment - note I said HOUSE - which includes Mortgage - Interest and Principle, Taxes, Insurance, Homeowners Association and PMI (if you get a high LTV loan)
4. Down and Dirty - another calculation is that you can afford 2.5 times your salary in a house.  A $50K per year worker can afford $125,000 in a house.

Step 4

Run all those numbers - tabulate them in Excel or however you do math best…. BEFORE you start shopping!

Then when you do go log on your favorite real estate website - like www.bocaexecutiverealty.com then you can start searching in your price range.

Having these numbers ready for your professional and Licensed Mortgage Broker (like me!!) will help speed up the prequalification and preapproval process that you should proceed with prior to meeting with your Realtor.

You can then call your friendly neighborhood Realtor with the information you have collected and let them point you into the right neighborhood for your needs and negotiate the best deal for you!

For More Information on Boynton Beach & Lake Worth Florida Real Estate and Mortgages, please contact

David Podgursky Broker Associate & Licensed Mortgage Broker Boca Executive Realty  & Boca Executive Mortgage 561-504-6949 cell DavidP@BocaExecutive.com Your Full Service Source for Residential and Commercial Real Estate and Mortgage Loans in Florida