Whether you are new to the mortgage process or a veteran of the industry, the terms used in the initial steps of getting a loan can at times be confusing and misleading. Understanding the difference between a pre-qualification and a pre-approval helps determine how much house you can afford, and if you are qualified to get a loan. Below, we break down the difference between two very similar and equally important terms:
The pre-qualification is a less involved process than the pre-approval and can be done over the phone or online. As the borrower, you provide the lender your overall financial picture including debt, income, and assets. It does not involve an analysis of your credit report or a close look at your ability to purchase a home. The pre-qualification letter allows you to explore your mortgage options with a lender and ask any initial questions.
A pre-approval letter comes from the mortgage company you are working with and is essentially a commitment that you have a loan approved for a certain amount of money. This letter is required before a full mortgage loan approval and includes the following:
- Credit check
- Income/employment verification
- Financial obligations such as credit card balances
- Copies of W-2s and bank statements
Once you are pre-approved, you can move forward with looking for a home knowing you have a conditional commitment. This gives you leg up on an offer from somebody who has not been pre-approved.
If you recently bought a new home, there are several things you can do immediately to set yourself up for low energy costs, even before you unpack your boxes. Getting a head start on this small list can save you a lot of money in years to come.
1.) Immediately replace the air filters.
This task takes only seconds and is often times forgotten by new homeowners. By replacing the air filter, your HVAC or air-handling system will not overwork at minimal efficiency. Stock up on a few extra filters so you are always prepared. The average home with no pets should have a new filter every 6-12 months, and a average home with a pet, every 60 days or so.
2.) Lower the hot water temperature.
120 degrees Fahrenheit is the ideal temperature for your hot water heater as most people never use water any hotter than that, and it can be dangerous to human skin. Any energy used to keep water above 120 degrees is not being used efficiently and lowering the temperature will save you money on your energy bill.
3.) Clear all vents.
From dirt and dust, to any furniture or structural obstructions, make sure all of your vents are clean and clear. If a vent is blocked, the heating and cooling units work overtime. Cleaning vents of dust and debris enhance clean air flow and makes for a healthier home.
4.) Check for leaks.
Make sure all toilets and plumbing is running efficiently and there are no leaks. Replace and repair any running toilets or dripping faucets to ensure you aren’t wasting water and throwing away money.
5.) Install new lighting.
By now, we all know that LED bulbs save us a lot when it comes to money and energy. While they are a bit more expensive than other bulbs, they last much longer and are a worthwhile investment. Consider replacing all of the old lighting in your new home with an LED option and you’ll be saving immediately.
A lot can change between buying your first home and downsizing to a home you’ll enjoy during retirement. Chances are it will be your last big move and you want to make sure you get it right. Consider the following tips for finding a retirement home that best fits your needs:
Location For Years to Come:
There’s a good chance you want to stay near your family and friends, but you should also consider a location that will allow you easy access to amenities. Finding a home near grocery stores, shopping malls, or public transportation options will serve as a convenience in later years when mobility becomes more of a challenge. You might also have a certain hobby you enjoy, like playing golf or going to the beach; consider the time it will take to get to these places when choosing your home for retirement.
Omit the Stairs:
Even if the idea of struggling to climb a flight of stairs seems years away, you might look for single-story homes to eliminate this inevitable nuisance. If you are thinking of new construction, then take the opportunity to implement features like wide doorways and walk-in showers so you are guaranteed a smooth transition into your later years.
How Much Space Do You Need:
This applies both inside and outside. Do you need or want a large yard that is going to require continued maintenance down the road? Even if you enjoy yard work, make sure you find a home with manageable outdoor space that won’t become a hassle later on. For inside, consider the amount of rooms and square footage you’ll be cleaning and taking care of. Do you still need extra guest rooms and a formal dining room?
Plan for Financing:
At this stage of your life, you might be able to afford a large down payment, or even pay off a mortgage outright and eliminate your expenses. Even though nobody wants to have a mortgage, sometimes it is necessary to give yourself the flexibility to live the life you want and have worked so hard for in retirement. No matter your current circumstance, always be sure to plan for the unexpected.
By considering these helpful tips, hopefully you will have a thorough understanding of just what kind of house you need to enjoy your retirement years and beyond.
By Day: Kim is new to the Norcom team and has been with us for a few months acting as Sales Manager in our Glastonbury, CT office. Her daily goal is to reach at least five contacts through calls, emails, and getting out on the road to visit referral sources and find new business opportunities. Being new, Kim has found the support of the IT and Marketing Departments invaluable and she learns the ropes. She loves the collaborative community at Norcom and finds it refreshing that if she needs help working through a loan scenario, she can simply walk over to speak with the Underwriting Department who is always more than willing to help. You can often find Kim at any number of networking events as she is constantly working to get out and make new business connections.
By Night: Kim recently bought a new home so she is currently occupied with decorating it and exploring the new surroundings with her two dogs, Meaty and Kali. Her two children bring her the most joy in life. Her son is a US Marine Vet and her daughter had an exciting amateur Motocross career which took the family on extensive travel. Kim spends her free time supporting military families through a variety of online communities, serves as the Deputy Treasurer for Eastford, CT, and enjoys riding motorcycles. She loves going to live concerts and spending time at any beach she can get to, including a recent trip to Hawaii. Most people don’t know that while she does not actually fish, she hosts a huge open house party for family and friends on opening day of fishing seasons and considers it one of her favorite traditions.
Would you share some of your background and personal story?
Like a company, the balance sheet can never tell the entire story. In 1985, my mother took four children in the middle of the night to escape Vietnam for a better world. My father never made it on the boat. He was caught and put in jail, which was very much like a concentration camp. On that same night, our boat was met by Communist guards before we entered international waters and everyone on the boat offered up their valuables to earn our escape. It worked, and they let us go.
The following day, we were robbed by Thai pirates. Since we had already given everything away, they retaliated by killing many people on the boat, including my mother, and three-year old baby sister. The pirates took their six boats and continuously rammed our fishing boat until we were slowly sinking. Holding onto a wooden board to stay afloat, we were eventually rescued by an oil driller and brought to Galang Island, a refugee camp in Malaysia.
Luckily, my aunt, my father’s sister, was also on the same boat, and became our legal guardian at the refugee camp. She has six children of her own, and a niece and nephew from her husband's side of the family. Together we were sponsored by her husband who escaped in 1981, and eventually traveled to Salt Lake City, UT. In 1986, when the family heard that there was mill and factory work in Worcester, MA, we packed up to travel there and have stayed ever since.
I went through the Worcester Public School program, and graduated valedictorian of my high school, Class of 1996. With the help of my guidance counselor (since my family members didn't know what further education was), I was accepted to Brandeis and graduated in 2000. I was originally on a path to attend medical school, but later switched my interest and ended up in law school.
How did you find your path to becoming an attorney?
For me, becoming an attorney was accidental. As a Vietnamese immigrant, the elder generation always associated attorneys with liars and cheaters, and so it was never anything I thought to pursue as a career. After graduating Brandeis University in 2000 with majors in Neuroscience, Psychology, and Economics, I eventually realized I no longer wanted to go into the medical field.
In 2003, I got my real estate license and worked towards obtaining my real estate brokerage license in 2005. From there, I established LeHong Real Estate & Business Brokerage. In the years following, I purchased several businesses and decided to enter law school as a part-time night student at Western New England School of Law in order to better protect myself and my investments.
Quickly into my second year of law school, I realized I could see myself practicing law as a career. In 2010, I graduated with my JD/MBA and sold everything to start my own law practice.
Who do you consider your mentors?
My mentors have always been my educators, beginning with Mrs. Dowd, who taught me English in ESL class at Granite Street School. Then my guidance counselor in high school, Mr. Dowd, helped me apply to college and exposed me to the possibilities of higher education. At Brandeis, Professor Kalpana White not only mentored me in the biology lab, but outside of the classroom as a human being. I still call her for advice today.
What are some of life’s most valuable lessons that you apply to business?
I have learned that hunger develops a drive, but it’s important to make sure this drive keeps you on an ethical path. Having a JD is actually a double-edged sword because you can use it towards helping people or hurting them. I work hard to make sure the path I take is clear, and that billable hours don’t dictate important decisions.
Everything I do as an attorney has long-lasting effects on families and I find more value in that than using my JD to serve myself personally.
What are some of your passions outside of work?
Life is about giving back, and I have always wanted to leave the world a better place than I found it. I am inspired by my mother’s sacrifice and the educators who helped me get to where I am today. I currently serve as the board president for the Southeast Asia Coalition, which I have been part of for five years, and have aided in the service of over 10,000 immigrants like myself. I am also the VP of the Vietnamese Business Association of Massachusetts and work to grow the community and help mentor those in need of business assistance.
What do you value about your partnership with Kristen Walther?
Since meeting Kristen by chance through a mutual loan transaction, she has become much more than a business partner; I consider her both friend and family. I can call her in the middle of the night for advice on family issues, and she is always there to answer. This relationship and willingness to go beyond the parameters of a traditional business partnership has founded a loyalty and trust that can’t be matched.