February 24, 2020 —
If you are thinking about buying a home, you might wonder what price home you can afford. Here’s information that may help you!
A prequalification letter is your lender’s calculation of the maximum amount you can afford when purchasing a home. Prequalification can be completed fairly quickly because it requires less information than mortgage pre-approval.
After prequalification, you will need approval for a mortgage. Pre-approval is the step between prequalification and approval for your mortgage.
Being pre-approved for a mortgage
can mean the difference between getting or missing out
on the home you want!
Benefits of getting pre-approval for a mortgage, include:
- Knowing exactly how much you can afford
- Giving you a competitive edge over non-approved buyers
- Speeding a seller’s ability to accept your offer
- Reducing the time a lender needs to fund your loan
To get mortgage pre-approval and approval, you must provide documents your lender will verify, including proof of:
- All debt and monthly debt payments relative to your income (debt-to-income ratio), including:
- Car loans
- Outstanding school loans
- Credit card debt
- Available cash and savings
- Total assets, including other properties you own or rent
- Credit rating
Mortgage-related fees added to the purchase price of a home include:
- Home inspection, which can range between $300 and $500
- Home appraisal, which can range between $300 and $600
- Copies of county records for your property, which vary depending on the county
- Notary services, which vary depending on the notary
- Courier services, which vary depending on the courier
- Credit report, which can start at $50
- Applying for, processing, and finalizing your mortgage, which is typically $300 or more
- Mortgage points, which vary depending on the lender and percentage rates
To avoid unwanted surprises, track all mortgage-related fees
as you engage in the mortgage process.
The difference between having an idea about
and knowing exactly what your budget will allow
can influence your lifestyle short and long term.
When you’re ready to begin looking for the home of your dreams, I can help calculate an ideal budget for your finances that will help protect you from unwanted surprises at the time of purchase and for the duration of your mortgage.
I can help eliminate confusion about getting a mortgage
and ease your home buying experience!