How much home can you afford? The answer to this question is based upon
two factors:
- Your personal "financial comfort level"
- Your financial condition
You may qualify for a loan amount that is greater than your comfort level.
You should be conservative when assuming financial obligations, this will
allow you to account for "rainy days". You should not feel obligated to
purchase a more expensive home simply because you qualify for more money.
Remember to stay within your comfort zone.
Your financial condition is determined by your payment and employment
history, as well as available funds for downpayment. Having met financial
obligations in the past allows you to more easily obtain financing in the
future.
Two types of loan approvals are available based on where you are in your
home buying process:
Pre-Qualification is an estimate of how much you can afford in a mortgage
payment. It is just that, an estimate. It takes little time and is ideal
for those simply "window-shopping" or just interested in obtaining a rough
estimate of their current financial standing. It is based upon information
you provide, and is subject to an approval process, including credit
history, appraisal, income and asset verification.
Pre-Approval on the other hand, is different. It is a firmer commitment on
behalf of the mortgage company. Credit, employment history and assets
are checked and verified. Pre-Approval requires filling out a complete
mortgage application with the exception of the subject property
information. It is ideal for the serious home buyer who has not yet
selected a new home, subsequently, the mortgage terms are subject to the
appraisal of the home you intend to purchase. Pre-Approval gives the home
buyer an advantage in the marketplace in several ways:
- It is easier to negotiate with a home seller
- Closing the transaction takes a shorter period of time
- The home buying process is less stressful because you know you are
Pre-Approved
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