Once you have an idea of the type and size home you want, as well as area you’d like to look in, you need to get pre-approved by a lender. By doing this before looking for a home, you’ll save yourself time, energy and frustration.
A pre-qualifying loan will:
- Determine how much home you can afford. Pre-approval helps you avoid buying less home than you can afford or being disappointed if you don’t qualify for as much as you had hoped.
- Show your total investment. You’ll know approximately how much money you’ll need for a down payment and closing costs.
- Let you know your monthly payment. You’ll have a close estimate of what your monthly principal, interest taxes and insurance (PITT) will be.
- Identify the loan programs you qualify for. With the wide variety of loan programs available, it is important to know which types you qualify for and which will best suit your needs.
- Strengthen your offer. Sellers are more inclined to accept realistic offers when they know that you have taken the time to be interviewed by a lender and can qualify for a loan.
In order to be pre-approved, the lender will need to know:
- Your employment history and income.
- Your monthly debts and obligations.
- The amount and source of cash available for down payment and closing costs.