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First-time home buyers are usually very excited about finding and purchasing their first home. The question I always get when I meet with a new buyer is, “Where do I start?”
The first thing buyers need to do is determine their purchasing power. They will need to know how much home they are qualified to buy, what monthly payment they can afford, and how much cash they will need to bring to the table at closing.
This will require that buyers meet with a lender to get a pre-qualification, or a pre-approval for a mortgage.
Generally, a lender will review a buyer’s credit, verify income, look at their debt, determine a debt-to-income ratio, and come up with an amount that the buyer would qualify to borrow. This usually requires the buyer to submit bank statements, pay stubs, income tax returns and some other documents that present a picture of their financial fitness.
The lender can do a quick credit check and issue a pre-qualification based on information given verbally by the buyer. Or, the lender can do a thorough review of the buyer’s documents and issue a pre-approval.
The pre-approval is much better than the pre-qualification because it means the lender has already verified the information required for the loan. The pre-qualification only means that the buyer looks qualified up front, but the lender still has more documents to review.
If you are ready to purchase your first home, you should go ahead and contact a lender to get a pre-approval. You can contact your bank or credit union for this, or you can ask your Realtor for recommendations for good local mortgage lenders.
You will need to have a letter from the lender showing you are pre-qualified or pre-approved for a loan before you can submit an offer on a home. A home seller is not likely to even consider your offer unless you can show that you are financially qualified to purchase the home.
The lender will also help you determine what monthly payment you can afford, and how much money you need to have saved for down payment and closing costs.
If you are ready to start looking for a home, call Rose King and she will help you get started!
