If you are interested in purchasing property or land, chances are you will need some type of loan. Finding the right loan will take time and will differ depending on your financial needs. There are many different factors to consider. Here are a few things to think about.
- Your current financial status.
- How you believe your finances will change over time.
- How many years you plan on keeping your house/land/income-property.
- Would you be comfortable if your mortgage payment changed over time?
Get a Mortgage Pre-Approval
An important ingredient in a successful home search is knowing how much you can afford. You don’t want to fall in love with a property only to find out it’s outside your price range.
That’s why we recommend getting a Mortgage Pre-Approval. This is a document from your bank or other lender stating how much of a mortgage they are willing to give you. There are two advantages to getting this pre-approval:
- It gives you the peace-of-mind of knowing you can afford homes you view on the market, and won’t have problems arranging financing.
- It’s a sign to sellers that you are a serious, prepared buyer – which gives you the edge when making an offer.
You can arrange for a Mortgage Pre-Approval with your bank or other lender, or by working with a good mortgage broker. We’re well-connected in the local real estate scene, so if you want us to recommend a reputable broker or lender, please contact us.
Pre-Qualification vs. Pre-Approval? They sound very similar, but are actually vastly different. A Pre-Qualification means the lender has decided that you would be eligible for a mortgage loan up to a certain amount – based on information you provide to the lender. The lender may or may not even take into account your current credit report. This is helpful at the very beginning of the home search process if you are unsure what your current financial situation will support in terms of a mortgage. It is just a snapshot and is virtually useless in the home-buying process beyond that.
How Much Home Can You Afford?
Banks and lenders use specific criteria to determine how much of a mortgage they’re willing to offer you. They look at your income, expenses, credit history and employment status, as well as the down payment you plan to make on a home. It may seem like a scary process, but it is actually straightforward. You can usually get a Mortgage Pre-Approval in a day. You’ll be glad that you did.
By knowing what you can afford, you can confidently shop within that price range. For example, if you qualify for a $250,000 mortgage, and you have another $100,000 available as a down payment, you can look for homes in the $350,000 range.
Have questions about arranging financing? Please submit the form below or call or email us.