Home Loans & Calculation Errors | Shopping For Loans


Why Is Pre-Approval SO Important?

Home investing is a complicated process. That's why as your Real Estate Sales Professional, with a growing technology background, I will be able to help you with this initial process. Starting the home process starts with you researching on Zillow first! This is a common thing in the era of the internet age. But this also comes with its complications. Oftentimes investors will become emotionally connected with one property they've seen online based on the captions they've read or the professional photography they've seen. As a result, as a strong-willed yet compassionate REALTOR that I am, I have to guide you to pinpoint exactly what you want and need. 

Preapproval is the serious stage of real estate investing. It proves to sellers and their agents that you're completely serious about investing in their home. It's completely separate to a prequalification letter which is essentially akin to a worthless piece of paper. Preapproval means you've discussed in detail, for hours at a time, with your respective loan provider about different loan programs and were able to come to a conclusion about which loan is best for your current situation. This not only on a qualification basis, but also on an affordability or risk-adjusted basis. That is what you and your loan professional will workout between yourselves. 

Can Calculation Errors Exist? 

Of course. Like anything in life, things can be fallible. I personally go by the Pareto law which states that 20% of all things will generate 80% of all results. In some cases, 20% of loan offers will have some sort of calculation errors, which can cost you big-time. It is always best to peer-review your loan offers given to you by your trusted loan officer or broker because oversights can occur. In fact, in the book "All About Mortgages" by Julie Garton-Good (4th Edition), the author states that "between 20 to 30% of all adjustable-rate mortgages have calculation errors" (Garton-Good, pp. 153). This could be as a result of an ARM being indexed incorrectly, a fat finger error of one of the rate recalculation timeframes, or rounding errors. 

This is why shopping around with different loan providers is so important. Having a trusted loan officer or bank branch you work with, especially locally, will provide you with benefits both short-term and long-term. Also keep in mind that each provider specializes in different types of loans. Some will generate a lot of VA loan business, while others may work more on the residential sides. Also, many loans come with their own caveats. For example if a mortgage bank or broker offers to pay closing costs with the loan, that may come with higher rates. Once again consult with a loan professional on discussing such matters BEFORE searching for your next investment property in Long Island City! 

In Summary

I hope this was an enjoyably short read for you filled with a lot of value and insight into one crucial aspect of the home investing process! If you liked this, don't hesitate to share it or visit my other content platforms! 

Home Loans & Calculation Errors | Shopping For Loans Home Loans & Calculation Errors | Shopping For Loans Reviewed by Alex Sung on August 25, 2020 Rating: 5

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