Buying a home can be confusing, especially when it comes to the financing part. Where do you start and what do you need to do?
The first step is contact mortgage lender to see how much house you can afford. This is called Pre-Qualification.
It is a good idea to get pre-qualified for your loan before shopping for a home. Pre-qualification involves supplying a lender with basic information regarding your debt, income and assets. From this information lenders can get an idea of the loan amount for which you qualify, and it can usually be done at no cost. This is a basic analysis of your general position as a borrower.
When lenders pre-approve you, they ask questions about your income, total debt, monthly payment obligations, current employment, payment history, and any negative factors. The lender verifies all of the information and documentation that you provided and performs an extensive check on your financial background and current credit rating. If you qualify, you should receive a written commitment - a pre-approval letter - for a loan up to a specified amount subject to certain terms and conditions. However, this commitment is not a guarantee that your loan will be approved when you do settle on a home to purchase.
Here is a list of Reasons you should get pre-qualified for a loan prior to your home search:
1. You will know the price range of the home you can purchase. You will actually save time looking at homes that best suits your actual budget.
2. You will know what your approximate monthly house payments will be.
3. Sellers may find your offer to purchase more favorable if they know your ability to secure financing. In other words, this may make your offer more competitive if you are in competition with other offers.(Note: Most sellers will not look at buyers offer without Pre-approval Letter.)
4. You can select the best loan package for your needs without being under pressure.
5. Pre-approval gives you at least some peace of mind, which you will appreciate during the process of buying a home.
Talk with your lender or one of ours to find how much you can get pre-qualified for.