that you have your list of features you want in your new home, you
are ready to start looking! Well, not just yet. You are going to
need to know in what price range to look. There are two ways to go
about this. You can get prequalified or preapproved for a mortgage.
Either way you will need to contact a mortgage company. Go to our
to investigate rates and companies in your area.
There are some key differences between
prequalification and preapproval for a loan that you need to be
aware of. Loan prequalification is a simple process. It takes into
account very basic information regarding your financial status and
gives you an amount for which you may qualify. This can be done
strictly on a verbal level or electronically over the Internet. The
prequalified amount is based solely on the information you provide.
In most markets, prequalified buyers usually hold little clout
compared to preapproved buyers due to the fact that the information
given during the prequalification process is not thoroughly
investigated and therefore may be unreliable. Where a preapproved
buyer is actually approved for a loan of a certain amount, a
prequalified buyer is only told that they might be approved
for a certain amount.
Preapproval is a much more involved
process. The lender will take all pertinent information regarding
your finances and perform an extensive check on your current
financial status. This will ultimately give you the exact amount
that you will be eligible for (depending on what type of loan you
decide to go with). Being preapproved lets the seller know that you
have gone through an extensive financial background check and there
should be no unexpected obstacles to buying the home. You can see
how being preapproved would be more attractive to a seller than just
The type of mortgage you apply for will
depend on many factors, but the majority of that decision will be
based on your ability to pay a monthly installment. If you can only
afford a $1000 dollar a month payment, you are not going to go out
and buy a $250,000 home, unless you have a large sum of money set
aside to make a sizable down payment! Financial planners say that
you shouldn't pay more than 28% of your gross income for housing
(that includes principal, interest, taxes, and insurance). Depending
on your debt to income ratio, that percentage may change.
Once you have determined what you can
afford, the next step is to choose a mortgage plan. There are many
different mortgages out there, so take some time and explore all of
the possible plans for which you qualify. You could save yourself
thousands of dollars in the long run!
save you time and money by being your professional guide through the
entire loan process. She will be able to counsel you on the
advantages and disadvantages of certain types of loans and help you
understand the "real" cost of a mortgage. Shana will also
act as your personal advocate and liaison between you and the lender
as you proceed through the approval process and closing by working
with your lender on a regular basis.