Before you start looking at homes, you want to have a good idea of how much you can buy. If you find a home that you love and then find out you can't qualify for it, it makes it so much harder to find another home!! Most real estate agents want to know what you can qualify for before they show you homes and that is part of the reason. Everything you see will compare to the home that you can't afford! Knowing what you can spend will help to avoid this!
To get a rough idea, you can get a lender prequalification. It is a quick process where they will ask several questions and give you a basic idea of what they think you will qualify for. However, that is not a mortgage approval and is not binding.
A mortgage preapproval is more involved and will require documentation from you. You will need to provide a paystub, w-2's and a bank statement. The lender will pull your credit report and qualify your income. Once that is complete, they run the file through a underwriting system and can issue an approval letter. The mortgage approval will still need to be underwritten after the appraisal and title work are complete, plus additional verifications are done after you have an accepted purchase agreement.
Once you know how much you can spend, it's much easier to go shopping for a home!! You will know what you need for your down payment and closing costs, plus what your monthly payment will be. During the process, you want to make sure to watch what you are spending. If you decide to make a major purchase (furniture, car, etc), it may affect your mortgage approval. If you have a job change, it can also affect your approval.
When are you looking at homes, keep in mind your monthly payment and any other expenses the home may have – for example, utilities, maintenance on the home. These expenses can also affect how much your home will cost, but they do not play into the mortgage qualification unless it is a VA loan. You want to make sure you leave yourself money to do other things – you do not want to be "house poor".
After you find a home, your lender will finish the processing of the loan. You will need to get your homeowner's insurance set up and get ready to move. Make sure you let your loan officer know about any changes and also make sure you get them any information they ask for as soon as you can. Processing your loan will take some time and underwriting can also take a few days. Delays in getting information from you can delay your closing.
Buying a home is an exciting time and we try to make it as easy as possible! Make sure you ask any questions you have. We want to make sure you have the best experience you can!
Leslie Vanderwerf, NMLS ID#335509, Advisors Mortgage - Email – Website
