Smart Homebuyers Start With A Budget And A Pre-Approval

Real Estate Agent with Steve Lester Homes License#0604289

So you have decided you want to buy your first home or need to buy a bigger home to accommodate your growing family. It is so important to know how much you can spend and more importantly how much you should spend on that dream home. Your first step should be to hire a real estate professional like me as we have the contacts, experience and the market knowledge to guide you through this challenging yet exciting time.

Determining a budget is critical as you determine how much home you can afford and the home features that are most important as compared to most desired. There is a big difference between must-haves and those features we want, but don’t need necessarily. Start with determining what your debt-to-income ratio is, as it will be a major factor that your lender will be considering in the mortgage application process.

Once you have established your budget that you are comfortable with, it is now time to find a mortgage lender that you are comfortable with and have them provide you a pre-qualification letter or preferably a pre-approval letter. Your real estate professional will have a list of preferred mortgage professionals that they can recommend to you that they know and trust if you so choose.

It is definitely to your advantage in this very competitive real estate market to know what you can spend as well as know how much house you can afford. Sellers want to know that you can buy their house if you submit an offer and that is where being pre-qualified or pre-approved can provide you an advantage and show them you are a serious buyer.

Freddie Mac provides you an idea of what lenders are looking for in their description of the ‘4 C’s’ that help to determine the amount lenders will qualify you to borrow. Those are listed below.

1. Capacity: Your current and future ability to make your mortgage payments.

2. Capital or Cash Reserves: The money, savings, and investments that have liquidity and can be sold quickly for cash.

3. Collateral: The home, or type of home, that you would like to purchase.

4. Credit: Your history of paying your bills and other debts in a timely manner.

You are making the largest financial decision that you will most likely make in your lifetime. Take the time to follow these first steps in the homebuying process and once again have a real estate professional like me on your journey with you to find that dream home. You will be glad that you did!

Sources: Forbes, Freddie Mac, KCM

Steve Lester, REALTOR® is with Keller Williams Realty living in Allen, Texas.



If you know of a friend or family member looking to buy, sell or lease, I would love to earn their business. Please send me their contact information and I will take good care of them!
Note: Texas Law requires all real estate licensees to give the following information about brokerage services: 

Comments (1)

Kristin Johnston - REALTOR®
RE/MAX Platinum - Waukesha, WI
Giving Back With Each Home Sold!

Amen!  I typically dont show homes to someone unless they are preapproved!

Feb 10, 2018 06:59 AM