Before you actually begin the process of looking at homes, you should complete the following:

Pre-Qualified:

Unless you are able to pay cash for your home, most buyers will need to go through the process of applying for a mortgage. By contacting a mortgage loan specialist before you begin your search, you are able to determine the amount of loan for which you qualify. Typically, a borrower is pre-qualified for a loan that amounts to 28%, or less, of their gross monthly income. In addition, if you know the amount of the monthly payment you would be comfortable paying, a mortgage specialist can calculate the price range for your home search. Getting pre-qualified for a loan also increases your chances of your offer being accepted. A seller is more likely to accept an offer from a buyer who already has funding versus one who still needs to get a loan.

Prior to getting pre-qualified, you should obtain a copy of your credit report so that there are not any negative surprises when you are ready to apply for your loan. Correct any errors that you may discover on your credit report. Also, you will want to reduce your consumer debt as much as possible by paying down credit card balances.

By going through the pre-qualification process, your mortgage specialist can provide you with an estimate of how much cash you will need for the sales transaction. Cash is needed for the down payment, earnest money, and closing costs of the transaction.

Pre-Approval:

This is a mortgage lender’s commitment to loan money to you. When getting pre-approved, you provide your loan specialist with all of the necessary financial records needed to apply for a loan. Getting pre-approved will provide you with the exact amount that you can afford and it shows sellers that you are serious about buying a home.