Are you considering buying a home for the first time but don't know where to start? I am going to break things down for you in a way that conquors your fears and builds your confidence to a level where it's like riding your bike for the millionth time. You can do it with your eyes closed. Of course, this is from the view of the Real Estate agent and I am not an expert in the mortgage industry, legal profession nor am I an accountant.
STEP # 1
How much are you able to spend on a new home?
Go to your bank, credit union or mortgage broker and ask to get pre-qualified or pre-approved for a home loan. Whether you choose to get Pre-Qualified or Pre-Approved is up to you and really depends on where you are at in terms of buying. If you have a home in mind already or you are planning on buying very soon then take the time to get Pre-Approved. If you are still a year away from buying and just curious as to what you may qualify for in the future then ask you lender for a Pre-Qualification letter. I will try to explain the difference, however, be sure to ask your lender for their version for clarification, after all, they are the expert on this!
Pre-Qualification vs. Pre-Approval
A Pre-Qualification letter can be done over the phone and you can get an answer usually within 24 hours. The lender will ask you for your income and debts and may ask to run your credit check. The lender will then send you a Pre-Qualification letter based on that information that you provided on the phone. This letter will tell you what you MAY qualify for based on the numbers that you told them over the phone.
A Pre-Approval letter is a little more detailed. The lender will ask you for copies of your last 2 years tax returns, bank statements, pay stubs, proof of down payment, and any other asset and liability statements you may have. The lender has a much better idea of the situation you are in financially and with this information will give you a Pre-Approval letter for a mortgage loan. These letters hold more weight than a Pre-Qualification letter when it comes to making an offer on a home and are preferred over the Pre-Qualification letters.
Neither of these are a guarantee by the bank to lend you the money when all is said and done, however, a Pre-Approval is a closer step to getting the loan than a Pre-Qualification due to the fact that your financials have been confirmed by the bank.
Now that you have your Pre-Approval letter showing you how much house you can afford...it is time to start checking out the neighborhoods, schools, etc!
Next...STEP #2....searching the internet to narrow your neighborhoods.....
<a href=>http://www.realestateclipart.com< Visit Real Estate Clipart for great real estate graphics!</a>
Comments(2)