Once you have decided to go out and buy a home, you should make sure that your first stop is to speak with your mortgage lender on what size of home you qualify for and how much you will need as a down payment.
It's easy to use the mortgage calculator's on web sites, but they only give you a basic picture of what the loan amount, down payment and interest rate will give you for a monthly payment.
Qualifying yourself on the Internet won't cut it.
The mortgage lender is the one that can take an honest look at your credit ratings, your income versus debt ratio and your employment history.
All of which are deciding factors on getting a loan.
Once they review these items, they can access what type of loan you can get, the rate of interest that they will be charging you, and how much house you can qualify to buy yourself.
In addition to this, the lender will also provide you with a Good Faith Estimate, which will breakdown all items involved in the loan, how much your monthly payment will be, taxes, and insurance needed and many more incredible details.
Without the prequalification letter from your lender, you are wasting everyone's time, including your own.
Without speaking to a lender first, you are shopping without money in your pocket and information that is essential to the contract and your peace of mind.
Being prepared will also give you an advantage when you do find the right home and the seller wants to know if you are qualified to buy it.
Couple this with the fact that the loan letter will let the seller take you seriously when you place an offer on a house.
This gives you a better shot in the negotiation process then just saying you are qualified to get a loan. Why should a seller take your word for it?
If you are in a competitive bid, you will lose because of you lack the loan qualification letter needed to prove you can pay what you say you can pay.
You may be thinking, well, I haven't even found the house yet. Exactly. If you don't know what you qualify for (from an actual lender), you shouldn't be looking at houses.
The rules have all changed with the lending business, so it is imperative to start this process early.
Get yourself preapproved for a loan six months in advance. The loan letter usually lasts for up to 90 days. If you haven't found anything by the time it expires your loan officer can issue a new letter.
Once you are actually ready to pull the trigger you will be confident because you will already know your target market's price range, what you will need to bring to the closing table and how much your monthly payment will be.
Until you are working with a lender, all you've got is a dream of home ownership.
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