Determining how much you can afford before you begin your home search will save you valuable time.
Prequalification vs Preapproval
- Prequalifying for a mortgage generally helps you determine how much house you can afford.
- Most lenders require that your monthly mortgage payment, including principal, interest, taxes and insurance, range between 25 and 28 percent of your gross monthly income.
- Remember, becoming prequalified does not necessarily mean that you will be approved for a loan of that amount.
- Preapproval from your lender means that you have provided them with the necessary paperwork, and they have approved your actual loan amount.
- Having preapproval for a home loan will put you in a much better negotiating position, because the seller knows that you are able to obtain your loan to purchase their home.
- Many lenders require 5 to 20 percent down payment on your home
- 25 percent down or more may qualify you for a lower interest rate
I can help you locate a lender who will assist you in finding a financing package that best meets your needs.