To start, the term “pre-qualified” is deceptive. This is a term with a specific definition to mortgage professionals, but because it is used somewhat loosely outside the mortgage community, its true meaning is often lost. When a borrower is pre-qualified for a mortgage, it means that the borrower can expect to be approved if his/her verified income, assets, credit score, and employment (among other factors) are consistent with the information submitted for the pre-qual. The loan officer providing a pre-qualification does not ask for income docs, asset docs, or pull credit, but will instead rely on the information provided by the borrower. Pre-qualifications are the least accurate of all approval types, and are useful for a borrower who’s just doing some rate shopping, to get a feel for what’s out there. Most importantly, pre-qualifications are non-binding. There is no consequence to the loan officer if a borrower is pre-qualified for a loan, and later denied the loan. Smart listing agents evaluating offer packages from buyers know the difference between a statement of pre-qualification and a pre-approval letter, and will not give much consideration to the former. Still, Realtors have phoned me in the past asking to have their client “pre-qualified”, and borrowers have called asking for the same thing, but in fact what they mean is they want to be “pre-approved”.

A pre-approval is the next level up from a pre-qualification. By definition, a pre-approval involves pulling credit. This allows the loan officer to examine the borrower’s credit for bankruptcies, judgements, mortgage lates (ie if you ever owned a home and were late on the mortgage), and tradelines. A “tradeline” is a liability to a creditor. For example, a credit card obligation, a department store card obligation, a car loan, are all “tradelines”. Typically lenders like to see four active tradelines…one at least 24 months old and three at least 12 months old. Though all pre-approvals should involve a credit check, not all approvals involve an income and asset review. This is where a new buyer may get into trouble, and where the caliber of pre-approvals a borrower might receive varies significantly. Thus it’s not a question of “are you pre-approved”, but “how thoroughly are you pre-approved?”

As a borrower, it is to your advantage to have your income and assets reviewed for the pre-approval, to make sure there are no surprises later on that may disqualify you for the loan. In this new credit climate, most loans now require you to provide last two years W2 statements, recent 30-days paystubs, and last two months bank statements. There are numerous things the mortgage broker will check for in these documents, such as the fluctuations/stability with your income as well as bank deposits. A strong pre-approval is one in which the broker has pulled your credit, examined your income and asset documentation, and found them all to meet loan program requirements. In a strong pre-approval letter, the only conditional items (ie items required before full approval can be granted) should be 1) 24-mo chain of title, 2) appraisal to verify home value, and 3) verification of employment. There may be a couple other minor items, but these three are the main ones. A pre-approval letter with language such as “if borrower provides income and asset statements consistent with information provided in the loan application”, means that your income and assets have not been reviewed….and the pre-approval letter is that less reliable.

Another question the borrower should ask when receiving a pre-approval letter is “have you run my loan scenario through Desktop Underwriter”. Desktop Underwriter, or DU, is an industry-standard automated underwriting engine that examines the applicant’s credit history, income, assets, and other factors, compares these items with loan program guidelines, and provides a computer-generated decision on the loan. This is always done before a file is submitted to a lender….but it may not always be done as part of a pre-approval. Why is this important? Because if your loan scenario was not run through DU, it means that the broker simply examined your credentials against the guidelines of the loan program, and made an assessment based on that. There was thus no “second check” or validation from a sophisticated source such as Desktop Underwriter (though there are other, similar programs such as Desktop Originator and Loan Prospector which accomplish the same thing).

So what does all this mean for the prospective homebuyer? Well, when you are ready to seriously start looking for houses, provide your mortgage broker as much information as you can….W2s, paystubs, bank statements, etc. Allow your broker to pull your credit, prepare a pre-approval letter, and make sure the language in the letter indicates your income and assets have been reviewed (this will also make your offer to purchase stronger!). Gathering this information may not be how you want to spend your Saturday afternoon, but this information will be needed eventually, and you want to make sure you have the strongest pre-approval possible to avoid unwanted surprises later!

One option is to remodel your current home so that it better suits your needs. This can work provided the neighborhood isn't the most compelling reason for your move. If you just need more space, adding an extra bedroom, bath or family room might solve the problem.

Keep in mind that remodeling also carries a financial risk if you overimprove for the neighborhood. To keep from making this mistake, consult with an architect and/or contractor to find out the feasibility of the project and approximate cost. Be sure to factor in unexpected cost overruns.

Then check with your real estate agent to find out recent selling prices in the neighborhood. You'll want to know about sales of homes similar to yours in its current, and in its proposed post-renovation condition. If the margin between the current and the renovated values for your home is much less than the renovation cost, it's may not be wise to proceed.

Also, if you find yourself having to sell within a few years of completing a major remodel and the market is soft as it is today in many areas, you might not be able to sell for enough to cover what you paid for your home plus the remodeling costs. For most homeowners, a large-scale renovation doesn't make sense, unless you plan to stay in the house for the long term.

HOUSE HUNTING TIP: Financing a renovation can pose problems today. In the past, many homeowners used home-equity lines to finance home improvements. Recently, many lenders announced that they would be cutting back or closing some equity line financing. So, even though you may have a large untapped equity mortgage secured against your home, you may not be able to rely on it to cover your renovation costs. Check with your lender before finalizing any plans to move ahead.

It's often impossible or undesirable to renovate your home to make it work for you. In this case, it may be preferable to buy another home. Interest rates are low and prices are soft in many neighborhoods. The house you currently own may take longer to sell and sell for less than anticipated, so plan accordingly.

Some markets are still low on inventory. So, it could take you awhile to find the right home to buy. In this case, if you can't afford to buy before selling, you might want to consider selling and renting until you find the right home.

The recent changes in the financing markets have posed a challenge for many homeowners who would like to trade homes at this time. No-cash-down, easy-qualifier, stated-income, negative-amortization and interest-only financing are more difficult to obtain today than they were a year ago. Check with your lender or mortgage broker to see how these changes affect your ability to buy now.

If trading homes at this point isn't an option due to financial constraints, consider doing a modest remodel. A basement, attic or garage might be able to be converted to add more living space, at least temporarily. De-clutter your home to improve your storage space.

THE CLOSING: The home-sale market and finance markets are always changing, particularly now. Have your real estate agent and mortgage person keep you posted on new developments so that you don't miss an opportunity to make a move.

Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.

1. Get organized: Painting is more than just opening a can and grabbing a brush. If you take the time to gather up all your paint gear, paint, rags, ladders, tools, aspirin and everything else you anticipate needing before you start, the job will flow much smoother.

2. Mark the cans: Use clear tape to cover over the name of the paint color, as well as any custom-formula markings put on the can by the paint store. This will help keep them from being obscured by paint drips. To simplify paint touchups, put a blank white label on the can's lid. On the label, write the name of room(s) where the paint was used, put a small dab of the actual paint on the label to simplify color identification, and then cover the label with clear tape to protect it.

3. Tint your primer: If you are priming your walls or woodwork prior to painting, have the primer tinted to a color that's close to the finish color, rather than leaving it white. Primer, which is less expensive than paint, provides good adhesion, and having it tinted may save you from applying a second coat of paint.

4. Intermix your paints: If you are using multiple gallons of paint, open at least two and intermix them in a clean 5-gallon bucket to ensure an even color blend.

5. Skip the roller tray: Many professional painters don't use paint trays for their rollers, which are easy to knock over or step into. Instead, use a roller screen that hooks inside your 5-gallon bucket.

6. Cover your brushes: When you need to get away from the painting for a while, wrap your brush and your roller cover in plastic wrap or aluminum foil. This will keep them from drying out while saving you the hassle of cleaning them before the day is done.

7. Be prepared: No paint job is without drips and other minor problems. Keep several clean rags close at hand -- one in your back pocket, one hanging on the ladder, etc. Rags are your best friend for getting little messes taken care of right away. Also, keep a bucket close by with a little clean water in it (for latex paints) or paint thinner (for oil-base paints) to aid with cleanups.

8. Proper cut-in: Do your cut-in work with a brush before grabbing the roller. For best results, you want to overlap your painting while it's still wet, so work in one area at a time, and then roll on the paint before the cut-in has dried. This "wet-lapping" helps blend the paint better.

9. Top to bottom: Start with the ceiling first. Paint the walls next, working from top to bottom. This allows you to better handle and drips.

10. "Push" the paint when brushing: When painting against a corner or an edge, such as a piece of trim, don't put the brush all the way against the edge -- paint on the bristles can leave small marks on the adjoining surface. Instead, touch the wet brush to the wall slightly away from the edge you're painting up to, then use the brush to push the paint -- not the bristles -- up to the edge.

11. Watch the grain: When painting wood trim or doors, always paint in the direction of the grain.

12. Brush cleanup for latex paint: Run warm water in a sink or bucket. Add a small amount of dish soap and a small amount of fabric softener. Soak your brushes for five to 10 minutes, then finish rinsing and cleaning under running water. Twirl the brush handle back and forth between your hands to spin out excess water. Allow to air dry, and then store the brush in its original cover to help maintain its shape.

13. Rinse and dry roller covers: Use a roller scraper, which looks like a putty knife with one concave-curved side, to scrape excess paint off the roller cover and back into the can. Soak the cover in the above solution, and then insert the cover into a roller spinner, which is an inexpensive hand-operated device that spins the cover quite rapidly. Spin the cover under running water to remove the rest of the paint and to rinse the cover, then shut the water and continue the spinning to remove most of the moisture. Air dry, and then store the cover in its original plastic cover.

Remodeling and repair questions? E-mail Paul at paul2887@ykwc.net.