Know what you’re able to spend on a home
Before you begin shopping for a home, you’ll need to meet with a lender to get pre-qualified for a home loan. Getting pre-qualified enables you shop for a home with confidence and will will help you:
- Determine a comfortable price range;
- Understand the types of loans you qualify for;
- Determine your monthly payment;
- Estimate the down payment and closing costs.
When you’re ready to make an offer on a home, a lender pre-qualification must accompany the purchase offer. While the pre-qualification form is not a guaranteed loan approval, it does let the seller know that you’re likely to be able to obtain financing. (If you’re paying cash, proof of funds is required in lieu of a lender pre-qualification.)
How do I get “pre-qualified”?
When you’re ready to begin shopping for a home, contact a mortgage broker or financial institution. You can ask friends and family for a referral, or I can recommend a lender who regularly works with buyers in the Green Valley and Sahuarita area.
The process of getting “pre-qualified” is quick and easy. It starts the process of discovering your purchase power and usually begins with a meeting or phone call to discuss income and employment, credit and liabilities, assets and desired payments. Your credit report is reviewed, enabling you to become pre-qualified fairly quickly.
Keep in mind that getting pre-qualified is not a loan application and doesn’t commit you to using that lender — in fact, you can get pre-qualified with more than one lender to compare interest rates and fees. You can decide which lender you want to use once you’ve made an offer on a house.
Eventually, your lender will require additional documentation once you complete your loan application, which generally includes pay stubs, W-2’s, 1099’s, recent tax returns, bank statements, and other documentation regarding income, assets and liabilities.
Once you’ve been pre-qualified, it’s important not to make any new financial commitments, such as buying a car, new furniture, or applying for a new credit card. Lenders take a second look at your credit in the days leading up to closing, and any changes to your credit picture could jeopardize your loan approval and cost you that new home.