3. Estimate Your Budget After your pre-approval, you will have a very good idea of how much you can borrow. Add that to the down payment you can afford, and you have your maximum budget for a home. Note that you can always borrow less than the maximum your lender is willing to lend. There’s no law saying you have to buy “as much house as you can afford.” Look at the monthly payment described in the pre-approval letter. Are you willing to pay that much every month, or do you have other expenses or savings goals you want to devote some of your income to? If so, consider a lower budget for your home. 4. Shop For Your Home and Make An Offer Now that you know your budget, you can start reviewing homes within that price range. When you find one you like, make an offer. Your pre-approval letter will make your offer much stronger — provided that the pre-approved loan balance and your down-payment reserve will cover the entire offer price. If you have a buyer’s agent, they will help you prepare the offer and give tips on how to make it stronger. If the seller accepts your offer, you will need to turn over an earnest money deposit and execute a purchase contract. Congrats! You are now “under contract.” The real fun is about to start! 2. Get Pre-approved for a Mortgage All of the documents noted in Step 1 will be required for a lender to pre-approve you. Note that pre- approval is a much more intensive process than pre-qualification, and sellers take it much more seriously. Pre-approval is worth the effort. A pre-approval letter from a reputable lender makes your offer much stronger. It gives the seller confidence that the deal will actually close because a lender has thoroughly vetted you as a borrower and given you a verified stamp of approval. As your mortgage broker leads you through the pre-approval process, they will help you compare interest rates, origination fees, loan-to-value tolerances, discount points, and explain the different loan programs available to you (conventional, VA, FHA, etc.).
RITA REALTOR | BROKERAGE 904-555-5555 | Rita@realtor.com | www.Authorify.com
LARRY LOAN OFFICER | OFFICE 904-555-1010 | Larry@loans.com | www.Authorify.com
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