Pre-Qualified
Pre-qualification has two main purposes: to keep you aware of just how much you can afford to pay towards a loan, & it shows a seller that you are a motivated and serious buyer. If you are already pre-qualified, it will be a tell tale sign to sellers that you offer on their home is a solid one and you won’t have to be surprised by falling in love with a home you just can’t afford.
KNOW YOUR PRICE RANGE
Prequalification shows the right price range for you to start shopping in. It is important to look for homes your income and credit score allow that you can be approved for a mortgage loan. Avoid disappointment by not seeing homes that you aren’t qualified to buy.
INSPIRE CONFIDENCE
If you are prequalified and give a seller a Prequalification Letter, it will show that you are committed and serious about your offer on their home. This could be the cherry on top that makes your offer shine above the rest. Ask your real estate agent about all the benefits of pre-qualification!
Frequently Asked Questions
When deciding on the amount you want to afford, you should keep in perspective how your finances will change in coming years. When it comes right down to it, the most important thing is your piece of mind & security in your financial commitment.
How Much Should I Borrow?
Your Mortgage Lender decides how much money you can borrow but, you decide what you want to afford. Lenders make their qualification decisions based on averages of expenses or income & formulas. Always leave room for “Murphy’s Law- unexpected occurrences- like new furnishings, repairs, or landscaping for your new home.
How Do They Determine How Much I Can Borrow?
anks use a 28/36 ratio to determine how much they can borrow to you. A housing payment shouldn’t be more than 28% of your monthly gross income and your debt (car payments, student loans, credit card payment, etc) shouldn’t be more than 36%. Be careful, your budget can only stretch so far.