You're ready to buy a home, or at least ready to get the process started. "Where do I start?" you may be asking yourself. Unless you're going to be purchasing the home with cash, start by speaking with a lender. Actually, speak with a few. You'll want to compare interest rates. Your bank or credit union may give home loans. You may also call mortgage companies.
A loan officer will ask questions to help determine an estimated amount you may receive for a loan. Questions will include, but are not limited to, such things as your salary, other debts you have, and the amount of your savings. It is important to provide accurate information. Your credit will also be checked.
Based on the information provided, the lender will let you know if they think you'll be able to get a home loan, and if so, the approximate amount. They will then give you a letter to provide to your real estate agent. Letters vary by lenders, but they will include the approximate loan amount. You are not bound to this lender, but it is common to use the lender from whom you receive the letter of pre-qualification/pre-approval/conditional pre-approval.
Speaking with a lender is important so that you know the price of home you'll be able to purchase. You may think you'll be able to afford a $300,000 home, yet you may find out you can only get a loan for a $200,000 home. Althought it will be disappointing, it will save you time from looking at homes that are out of your price range. In my opinion, it's best to buy a home less than for what you are pre-qualified. You'll want to have money for unplanned events, such as car repair and doctor visits.
If you've already started looking at homes, but haven't spoken with a lender, don't worry. Make it a top priority, though. Some real estate agents won't show you homes unless you have a letter from a lender. When you find a home, and make an offer, the letter from the lender will be sent with the offer. It will let the seller know you should be able to acquire a home loan,( based on the information provided to the lender).
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