For many home buyers, pre-qualification is the first step to buying a house.
But you shouldn’t put your feet up after the first step and expect everything to just fall into place: There’s plenty more to be done.
Here’s a straightforward guide for going from pre-qualified buyer to homeowner the smart way.
The pre-qualification process is quick and free. It should take less than an hour. During the process, you speak with a loan officer and answer questions about your financial situation.
Pre-qualification will give you a rough estimate of how much house you can afford. It’s not a binding agreement—it’s simply something you can use to gauge your buying capability.
Pre-qualification can be especially useful if you’re not sure you can afford a mortgage.
After you’re pre-qualified, your next step is to get pre-approved. This is an in-depth process. You’ll need to submit paperwork about your income, assets, employment history and residency status to a lender.
Getting pre-approved is almost like applying for a real loan, but it happens before you select a home.
Now it’s time for the fun part: home shopping. Using your pre-approval amount as a guide, shop for homes within your budget.
Since sellers and REALTORS® view pre-approved buyers more favorably, shop with confidence. You’ll come across as a much more serious buyer than any non pre-approved competitors.
Once you find a home you want to buy, the next step will be to put in an offer. If your offer is accepted, you’ll need to apply for a loan. The mortgage process can take some time, but since you’ve been pre-approved, the process may be faster because the lender will have all or almost all of your needed documents.
However, if too much time has passed since you were pre-approved, you’ll need to provide fresh bank statements and document updates.
Be aware that changes in your financial situation can affect pre-approval. When you’re in the process of obtaining a loan, do not do the following:
If you’re looking to change jobs or buy something expensive, wait until after closing.
If all goes well, you will be cleared to close—meaning you are fully approved. You’ll get a date for closing. During closing, you’ll sign and double-check mortgage documents.
If anything looks different than you were promised, don’t be afraid to back out; it’s better to leave a bad deal than to be locked into one.
When those papers are signed, you can grab your new keys. Now you’re a homeowner—congratulations!
It’s time to transfer the utilities, move in and make your new house your own.
Updated from an earlier version by Laura Sherman.