Here is Your Answer!
There are myths out there that make you believe your first step to buying a home should be starting to search for homes online. Well this is FALSE and not the best way to begin your journey to home ownership! To see the truths behind this myth and many like it please visit our blog post : Home-Buying Myths. The truth is you need to talk to a lender about getting a mortgage.
Why is the first step getting financed?
I know you’re saying right now, “Shouldn’t I know where I want to live first?”. And the only time this would be a correct order to move in, is when you have enough cash to buy the house with out getting financed. Let’s face it, for most of us this is not a reality – So you will need to get a loan. Getting a pre qualification is simple, but it can take time. Lenders do need to review your financial history to determine how much money they are willing to lend to you. Yes, I say willing because they are taking the risk giving you hundreds on thousands of dollars assuming you will pay your mortgage payments each month.
Knowing what your monthly payment will be will show you what your “buying power” is–that is, how much you can afford in total. Your buying power can affect what area you are able to purchase in. This means that rather than falling in love with a home and then finding out you can’t qualify yet or that the monthly payments are outside of your comfort zone, talk with a local lender first and make sure you are looking at the best homes for YOU!
Pre-qualification Vs. Pre-approval
So now you have two options . You can get a mortgage pre-qualification or a loan pre-approval. Now the pre-qualification gives you more of a ballpark of your purchasing power. This is not a guarantee so this option is more for the window shopper. On the other hand, a loan pre-approval is perfect for the active house hunter. The lender will take a deep dive into your finances and a promise for how much they are willing to loan you.
Now to get pre-approved for a loan, you need expect to be asked to reveal your income, the amount of money you have in savings, and your credit history, which will help lenders determine how much money they’re willing to loan to you. This seems like a lot of private information and you know what–it is! And still, the lender needs it to be able to give you the loan. A lender can tell you whether or not your financial health is good enough to set about on this home-buying journey or whether you should take a step back and do some prep work first.
One of the items you will review with the loan officer is your available savings you have for a down payment. They can help you understand your available options and how they all work! They will also let you know any imperfections you have on your credit history that you need to clean up. And one of the most important pieces of advice is that you “Don’t Put Any Purchases on Credit”! These tips are all vital to your first step to buying a home.
What if I do have Credit Issues?
The loan officer has access to programs to get you to that magical credit score! They can show you how to course correct if you are a few points away from what you need. Or they can partner you with a trusted vendor of theirs that put together a debt management plan.
We’ll set you up with suggested lenders who will get you started on the first steps to buying a home! After you know what you are comfortable spending or what you will need to save up for, we will set you up with a customized home search. From there, put your trusted Realtors to work on finding you the perfect place. From helping you search online to knocking on doors, calling neighbors, and sending letters–we are here to help. And we are here to make your dream of home ownership come true.