How much house can I afford?

One of the first steps in finding your dream home is determining how much house you can afford. While I am qualified in determining this for you, today's marketplace requires that you be pre approved for financing through a qualified lender. Through the pre approval process you receive a pre approval letter that lets the seller, lawyers, and real estate agents involved know that you are a serious buyer with the means to make a home purchase.

The Pre Approval Process

The pre approval process requires the lender to review your finances through credit reports, pay stubs, credit and bank statements, income tax records and sometimes other documentation. The amount you are pre approved for becomes a reliable estimate of what you can afford. However, you must keep in mind that items such as property taxes can potentially reduce or increase your actual qualifying amount.

In the past, pre qualification was often an acceptable method used for home buyers to determine the amount of loan they could afford. This method is less reliable and less acceptable today because it merely states that a lender (or sometimes a real estate agent ) made an estimate of what you could afford without verifying any information.

Shopping for a mortgage and lender

When shopping for a car or new appliance most people will comparison shop before making a purchase. Since buying a home is probably the largest purchase you will ever make, it only makes sense to comparison shop for your mortgage. The first place to start is with the institution that maintains your checking and savings accounts.

Question to ask about mortgage loans

1. What types of loan programs and interest rates do you offer?
2. Which would fit my situation best?
3. How long is the approval process once I have applied?
4. Once approved, how long does it take until closing?
5. Are there any negotiable items in the loan agreement?
6. Will my interest rate be locked and what happens if interest rates change?
7. Can I pay points to reduce the interest rate?
8. Are there any prepayment penalties?

The Mortgage Loan

While many home buyers still opt for the traditional fixed rate mortgage loans, there are a variety of mortgage loans available today. Each loan type is designed for a particular circumstance and/or the buyer's special needs. Within the market today there are personalized mortgages, adjustable (ARM's) and fixed rate mortgages, FHA, VA, GEM's, GPM's, Home Equity, Bridge Loans and more. By being pre approved and then applying for the mortgage loan that's right for you, you will feel much more comfortable in the home buying process.