There's no such thing as getting "pre-approved" for a mortgage

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Applying for a mortgage is a long process. Even before filling out the paperwork, the applicant must already have the correct “background” for the loan: a consistently high credit score, a satisfactory income at a long-term job, and a continuing ability to pay amortization– regardless of circumstance– for the duration of the mortgage. Some lenders require several background checks and interviews before approving an application. This long and tedious process sometimes causes applicants to jump at the first chance to cut the line.

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Buyers are sometimes approached by agents or banks claiming that they have been “pre-approved” for a mortgage. Without giving too much information as to how that happened, they imply that part of the initial paperwork and hassle will be bypassed; the scenario usually ends with the buyer submitting an application on the spot.

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Although a preliminary approval does exist, it is merely a means for the seller to see that the buyer has the means to pay for the property. It is by no means a guarantee that the buyer has “passed” the background check or is approved for a mortgage. If anything, being pre-approved for a mortgage simply means that buyers have been assigned to a mortgage rep or agent. In fact, it does not move them any further along the process. They are subject to all the same steps, and along the same timeline, as if they had applied for the mortgage themselves.



Applying for a mortgage has its own house of booby traps. Let Network Capital Funding Corporation help you in processing your loan. Read more about the company on this website.

Fix what's broken and earn along the way

In light of the financial difficulties posed by the last decade’s economic crisis, the Federal Housing Administration’s (FHA) 203(k) program aims to help individuals repair and renovate homes and acquire income in the process.

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With the 203(k) program, an individual can fix his or her house and charge the costs to mortgage payable over 30 years. This applies to renovating single-family homes or multifamily structures with up to four units. The total loan amount is taken from the property’s appraised value, together with the repair costs. Borrowers are required to make a down payment of only 3.5 percent of the loan.

The loan does more than just help individuals fix their homes. It may also allow them to profit from the repair. By buying a property for a low price and choosing fairly inexpensive but high-quality renovation, a borrower has the chance to incur a sizable equity.

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However, there is one catch. The borrower must live in the building up for repair. Experts on the loan stated that borrowers typically buy a run-down multifamily house, repair it, and then live in it for a year. They then refinance the loan to turn it into a conventional loan, then move on to another house. Most borrowers do this because of the 203(k) program’s interest rate, which is higher than most conventional loans at 3.75 to 4 percent. Additionally, borrowers have to hire a consultant who will determine whether the repairs done on the house comply with the government’s health and safety standards—which can incur additional expenses.

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As the famous quote from Lucille Ball goes, luck is “realizing what is opportunity and what isn’t.” To an individual with the right know-how, the 203(k) program not only helps build a home, it also opens many windows of financial opportunities.

Network Capital Funding offers many types of loans which borrowers can choose from. The firm’s team of experts helps clients determine the type of loan that works best for them. This website offers more information about the company and its products.

Homebuilders: Barely in the clear

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Although recent reports on the real estate market show U.S. home builder confidence at a six-year high, it may be too early to say the housing industry is back in full force. The country had seen steady gain in the housing demand since its record low in 2005, but experts at Forbes seem to think the industry still has a few challenges to overcome before analysts can say that the sector has recovered.

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Even with how Congress averted maxing out the national debt, the new “fiscal cliff deal,” or Taxpayer Relief Tax Act, provides a negligible leeway for credit seekers. Loan and mortgage applicants may only qualify if they managed to maintain exceptionally high credit scores– a chore that proved increasingly difficult during the economic recession. Those who do qualify for a mortgage could still be presented with undesirably high interest rates, which discourage borrowing or any purchasing activity in the real estate sector at all.

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In observing the trends, it is easy to note that real estate prices are rising faster than they’re getting sold. This is a familiar sign of another “burst” in the real estate “bubble,” such as was first seen in 2007. The symptoms are at risk of moving from residential real estate to commercial and corporate properties. Companies like Network Capital Funding have recently announced embarking on an extensive office redesign. While infrastructure improvements raise real estate value, the industry is not predictable enough to determine if the cost of construction will reward returns when the property is sold.



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