Should you talk to a mortgage professional before house hunting?
Absolutely! Even if you haven't so much as picked out houses to visit yet, it's important to see your mortgage professional first. Why? What can we do for you if you haven't negotiated a price, and don't know how much you want to borrow?
Well, we can help you figure out how much you can afford to borrow. Knowing this number will put you in a better position as a buyer. Sellers like it when their potential buyers come with proof of what they can afford. This is when it is important to understnad the distinction between being pre-qualified and pre-approved for a loan.
When we pre-qualify you, we help you determine how much of a monthly mortgage payment you can afford. We do this by considering your income and debts, your employment and residence situations, your available funds for down payment and required reserves, and some other things.
Once you are qualified, we give you what's called a Pre-Qualification Letter (your real estate agent might call it a "pre-qual"), which says that we are working with you to find the best loan to meet your needs. However, it is important to understand the a pre-qualification letter is just an estimate of what you are eligible to borrow. It is not a commitment to lend.
Howerve, getting pre-approved for a loan gives you competitive advantage when the time comes to bid on a home. This is because you have been approved for a specific loan amount. To get pre-approved, you will complete a mortgage application and provide us with various information verifying your employment, assets and financial status such as W-2 forms, bank records and credit card statements. We will review your mortgage options and submit your application to the lender that best meets your needs. Once the application process is complete, you will receive a pre-approval letter indicating the amount your lender is willing to lend you for your home.
A pre-approval letter is not binding on the lender; it is subject to an appraisal of the home you wish to purchase and certain other conditions. If your financial situation changes (e.g. you lose your job), interest rates rise or a specified expiration date passes, we will have to review your situaion and recalculate your mortgage amount accordingly.
When you find a house that catches your eye, and you decide to make an offer, being pre-approved for a mortgage will do a couple of things. First, it lets you know how much you can offer. Your real estate agent will help you decide on an appropriate offer, but being pre-approved gives you the confidence to know you can follow through.
More importantly, to a home seller, your being pre-approved is like you walked into their house with a suitcase full of cash to make the deal! They won't have to wonder if they're wasting their time because you'll never qualify for a mortgage to finance the amount you're offering for the home. You have the clout of a buyer ready to make the deal right now!
You can always use the calculators available on our site to get an idea of how much mortgage you can afford -- but it's important to meet with us. Every buyer has specific situations that can't be summed up with a simple calculator. We can look at your finances and help you determine exactly what you can afford.