Blog

Blog

There’s a lot to think about when you’re getting ready to buy a home, and while the most exciting part of the process is getting out there and looking at homes to find the perfect one for your family, there are a couple of important steps to take before you start your search to ensure the process goes smoothly. One of those steps is pre-approval.

1: Home Much Home You Can Afford

The question of how much home you can afford is probably the first one you should be asking. There are a couple of ways you can figure this out, but the easiest way is to take your monthly income after taxes, subtract your monthly debt obligations such as car payments and insurance, and calculate your monthly spending on things like groceries and gas, then figure out what is left.

Lenders will do the same thing during the pre-qualification process, although they use a very general calculation that includes only your debt and income. Usually they will allow loans up to about 30 percent of your monthly income before taxes, but keep in mind they don’t know your discretionary spending habits, so if you want to have more money each month for things like entertainment or clothing, you might prefer to borrow less and have a lower monthly payment.

2: There’s a Difference Between Pre-qualification and Pre-approval

There is a difference between pre-qualification and pre-approval. Pre-qualification usually involves discussing your income, assets, and debt obligations with the lender and they’ll give you an idea of about how much home you could qualify to buy. Pre-approval is the next step, so the lender will actually run your credit and verify the information so they can let you know with more certainty how big of a loan you could get. This is usually guaranteed for up to 120 days, so you can get pre-approved and then start your home search.

It’s important to note that neither pre-qualification nor pre-approval is a guarantee that you could get approved for a loan—that will not happen until you have a home to purchase and a specific loan amount.

3: It Should Be Your First Step in the Mortgage Process

The home buying process is an emotional one—you’re deciding on a place where you will spend most of your time, and raise your own family. If you begin your home search and fall in love with a home that is out of your price range, the ones that you could afford might be a disappointment.

Home sellers are also more likely to take you seriously in the search if you have been pre-approved for a loan, indicating that you’re not just browsing but you are in a buying phase.

The good news is that mortgage pre-approval is a quick process, so talk to a Salt Lake City mortgage lender today to find out what you need to do to take this important step.

October 15, 2016

3 Important Things to Know About Mortgage Pre-approval

There’s a lot to think about when you’re getting ready to buy a home, and while the most exciting part of the process is getting out there and looking at homes to find the perfect one for your family, there are a couple of important steps to take before you Read More
October 1, 2016

Are Low Down Payment Loans Really a Good Option?

After the housing market crashed in 2008 and 2009, a lot of people heard about how the proliferation of low- and no-down-payment loans contributed to a housing market where millions of consumers had little or no equity in their homes. These low-down-payment loans were criticized, and some lenders severely reduced Read More
September 15, 2016

Pros and Cons of Using Mortgage Broker Services

Many home buyers recruit the services of a mortgage broker when shopping for a mortgage. An experienced and knowledgeable mortgage broker can help you find the right mortgage, but there are advantages and disadvantage to consider before committing. Advantages Saves you the Legwork – Mortgage brokers have frequent contact with Read More
September 1, 2016

4 Questions to ask a Mortgage Broker

Most borrowers go through a mortgage broker for their home loan services. A broker can shop among different lenders to find the best deal; this is one of the main advantages to using a broker instead of a bank. Justified or not borrowers a lot of times feel they then Read More
August 15, 2016

Understanding ARMs

When securing a mortgage, one of your primary concerns should be what interest rate you’ll pay. Rates will often depend on the market conditions at the time you buy your home. If you want to avoid the stress that comes with following the rise and fall of interest rates, then Read More