Brooklyn Real Estate Q&A and Info

When you’re pre-qualified for a loan, it means that, assuming all the information you provided about your finances such as your employment history, salary, the amount of money you have for a down payment and so forth is accurate, you have the potential of getting a loan for the amount stated on your prequalification letter. Generally, banks and other lending institutions will pre-qualify you for a loan for free.

When you’re pre-approved for a loan, it means that your employment history, your salary, the amount of money you have for a down payment, your credit score and all other pertinent financial information has been verified. You are approvedfor a loan for the amount that your pre-approval letter states. Generally, banks and other lending institutions charge a fee of several hundred dollars for pre-approving you for a loan.  Usually, the pre-approval fee can be applied towards your closing costs.

If you are truly ready to buy within the next 90 days, getting pre-approved for a loan will save you time, and will give you a leg up if you find yourself in a bidding situation with another buyer who is not pre-approved. Also, many sellers require that you are pre-approved before they will allow you to view their property, ensuring that a potential buyers inability to qualify for a loan will not jeopardize a possible sale.

A reverse mortgage is a loan against real estate that requires no repayment as long as you live in the property.

In a forward mortgage, which is what a traditional mortgage is called, you repay the loan that causes your debt to decrease while the equity (the amount your property is worth minus anything you owe) increases. In a reverse mortgage the exact opposite happens. Equity is removed from your property either in one lump sum or through monthly payments, which increases your debt. The debt is paid off when the property is sold.

There are two types of reverse mortgages. One is backed by HUD, and the other by Fannie Mae. To find out more information about each, go to HUD’s and Fannie Mae’s websites.

On April 29, 2008 according to the New York Post, Rep. Anthony Weiner (D-Brooklyn/Queens) said in just nine years, the number of renters paying half or more of their income to their landlords has surged nearly 15 percent.   29.9 percent of Brooklyn renters pay more then half their paycheck to rent, up from 25.5 percent nine years ago.

Financial planners say a rule of thumb is that you should not spend more then a third of your income on rent.  What is the reason for this increase?  Affordable housing is ever shrinking in the five boroughs.  This is all the more reason for renters to start saving their pennies and purchase a home.  Owning is better then renting about 95% of the time.