Get Pre-Approved for Your Mortgage
- ASSESS YOUR FINANCIAL SITUATION Take an honest look at your income, your savings, and your debt…a real, honest look. What are you paying in rent now? Could you own a home for the same amount? Figure in all monthly income and monthly expenses as well as short and long-term debt before moving forward. Keep in mind that a house may have additional maintenance and utility bills your current rental property may not have. Your Mortgage Professional will counsel you on these expenses. Once you know what you can realistically afford and are comfortable with that, move on to the next step.
- KNOW YOUR CREDIT One of the most important steps towards home ownership and your future is learning about and managing your credit. Interest rates and loan options can vary greatly based solely on a credit score. Your mortgage professional should be able to educate you on these things. You can also pull your credit yourself at www.experian.com. Make sure you pay for all three credit Bureaus; it’s about $35 and well worth it. Once you have this information, don’t start closing or disputing items without the assistance of a professional….see the next step.
- MANAGE YOUR CREDIT When you have decided you are able to buy a house, stop everything you are doing financially, and credit-wise. Don’t apply for any new credit. Don’t apply to buy furniture for your new house, even if it is 12 months no interest. Don’t close any credit cards. And please, Don’t get a car loan, or boat loan, or even a scooter loan. You just may apply yourself right out of the house-buying market.
- FIND PEOPLE YOU KNOW, LIKE, AND TRUST Before you do anything else, find people you know, like, and trust to be your Mortgage Professional and your Real Estate Professional. If you don’t know anyone that fits that bill, get strong referrals from friends, family, or co-workers. The answer you should get when you asking, should be: “You gotta use (so and so) don’t use anyone else!” If they would trust that person help their own grandmother, you should be safe.
- PRE-APPROVAL Now that you are confident in your financial situation, have chosen the professionals you trust, know your credit and understand it, and have stopped all extra-curricular credit applications, it’s time to get pre-approved! Pre-Approval is the step your Mortgage Professional takes by completing an application, gathering all your financial documents, and submitting your file for pre-approval. You will then know exactly what you can afford so you and your Real EstateProfessional can begin the house hunting process. Then the real fun begins!
- PRE-APPROVAL VS. PRE-QUALIFICATION
Pre-qualification is not a mortgage approval but simply an estimate of what you can afford. When you pre-qualify for a mortgage, the lender also collects basic information regarding your income, monthly debts, credit history and assets, and then uses this information to calculate an estimated mortgage amount. The lender has not yet committed to supporting your financial needs and, therefore, you have not received an actual guarantee of funds.People who are pre-approved for a mortgage are more attractive candidates to the seller and have a better chance of getting the property when they make an offer.