If you’ve been through the home buying process already, you’re familiar with the age old advice to seek out a prequalification with a lender to know how much home you can afford. It seems like most sellers won’t give you the time of day unless you can show proof you’re a serious homebuyer. The reality is how much home you can qualify for depends on you.
There are several variables that can affect how much house you can afford. Are you able to raise your monthly income? Can you eliminate unnecessary expenses? What kind of financing alternatives are you planning to use? Can you qualify for a first-time buyer program? Are there special financing bonuses the builder is offering? Are you planning to use family and friends as a source of funds? Does the property you’re considering have income potential? Will you be renting any rooms out? The list goes on and on.
How you answer these questions determine the amount of home loan you can qualify for. As you inspect homes for sale, it’s a good idea to console with a reputable loan agent or real estate agent trained in assembling these types of transactions. Beware of prequalifications produced by generic fill-in-the-blank forms on a computer. By arranging an appropriate lender and seller, you could qualify for a better home.
Obtaining a prequalification with one solitary mortgage company only offers you a limited view of all the possible financing options available to you. A particular lenders prequalification letter only tells you one financial option when you work with them. It won’t inform you about the many other financial alternatives open to you. The best way to explore all possible financial avenues is to take advantage of every opportunity to negotiate a winning combination of lender and seller.
The prequalification letter you receive from a mortgage lender gives you an estimate of what you can borrow based on the data you supplied to the bank. It’s important to know this letter does not guarantee the lender will make you a loan.
If you want a better way to determine if you can qualify for a home loan, you want to apply for a pre-approval. By being pre-approved, you can approach a prospective Realtor or seller with confidence and negotiate a better deal than another homebuyer who isn’t pre-approved. You can even secure a loan pre-approval before you begin searching homes for sale.
However, a pre-approval has the same limitations as a prequalification because your borrowing power is dependent on the bank you use, the loan program, interest rates, and your financial history. It’s important to know your pre-approval provides only a small glimpse of your purchasing possibilities. While pre-approval offers a greater commitment from the bank, it’s still dependent on their verification of your information and the property’s ability to satisfy their guidelines.
Want to learn new strategies when searching Santa Ana homes for sale? Use these local Santa Ana Realtors to help you find one.
|
|