Get Pre-qualified!

How do you know how much you can afford to spend on a new house?

Before you begin dreaming about a new house, talking to a REALTOR®, or looking on any home sales websites, you need to speak to a lender about getting pre-qualified for a loan. Why? So. Many. Reasons.

Getting pre-qualified will determine your budget!! There is no point in looking at a $350,000 house if you only qualify for a $225,000 loan. You will fall in love with the more expensive home and then measure all other homes against the one you cannot afford; you simply cannot compare houses that are over $100,000 apart in cost. So don’t set yourself up for extreme disappointment! Most realtors will do one courtesy showing if a potential buyer has not yet gotten pre-qualified by a licensed lender. However, many sellers in today’s market will not accept an offer on a house unless the offer is accompanied by a pre-qualification or pre-approval letter. Sellers do not want to risk accepting an offer that has the potential to result in a terminated contract due to insufficient funds.

Your lender will let you know how much money you are qualified to borrow based on income, debt, credit score, savings, etc. He or she will be able to determine a rough monthly payment, and you may not be comfortable spending the maximum amount for which you qualify. If your credit score is a little low and causes you to only be eligible for a higher interest rate, your lender will give you suggestions to raise your credit score. If your debt-to-income ratio is not satisfactory (your debt is much higher than it should be based on the amount of income you earn), your lender will suggest holding off for a while. Get some of your debt paid off first, and then reapply for a loan when your finances are more stable.

There are many local lenders that are so easy to work with! You can easily apply for a loan online - see a list of Troup County lenders here. This link is also available on the home page of our website.

So why get pre-qualified before house shopping? It will help you determine how much you can spend on a new home, your REALTOR® can better understand your real estate needs and know that you are serious about buying a home if you have already spoken with a lender, and your offer is extremely more likely to be considered by a seller with an attached pre-qualification letter.

The next post… which type of loan is right for you?