To avoid falling in love with a home you cannot afford to buy one of the first steps before beginning the home search process is to obtain a pre-qualification or pre-approval letter from a mortgage lender. Determine the amount of loan you may qualify for as well as what amount you can afford to pay each month. In doing so, you will be able to focus your search on exactly what is in your price range and be armed and ready to make a move when you find the perfect home.
At minimum, you will want a pre-qualification from a mortgage lender which is simply an assessment to find out if your debt to income ratio fits within the U.S. Bank guidelines for home loans. You will have an estimate of how much you may be able to borrow. Keep in mind that this is a guesstimate, not a true application. Your credit history does not factor into a pre-qualification.
To speed up the home buying process as well as appear more serious to buyers, you may decide to take it one step further by applying for a pre-approval. The mortgage lender will complete a credit check as well as paperwork requirements for a mortgage. If any errors or problems with your credit arise, the lender will be able to guide you through fixing any issues before making an offer on a home. It is not recommended to apply for pre-approval unless you are wanting to buy within the next 90 days as your inquiry will only be good for a specific amount of time.
Your real estate agent will be able to provide you with information regarding local mortgage lenders as you begin the home buying process.
Anthony Coleman, Realtor, Top Guns Real Estate