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Before you start searching for a home, you should meet with your Verdeo Funding Loan Consultant to determine what homes are in your price range. This will help you and your Real Estate Agent narrow down the choices of the many homes on the market.
To pre-qualify, your Loan Consultant needs to ask you for some basic financial information in order to estimate the maximum mortgage you should be able to obtain. Typically, your monthly house payment should be approximately 28-30% of your total monthly gross income (before taxes). Your total monthly debt, including your mortgage payment, car payment, credit card payments and other loans, should be no more than 36-40% of your monthly gross income.
A pre-qualification is useful in providing you with the information you will need to begin searching for a home, but it does not guarantee that you will be approved for a home loan. To have that guarantee, you will need to be pre-approved.
Pre-approval is a more involved process than pre-qualification, and you will be providing more financial information to your Loan Consultant. Your Loan Consultant will need to verify your credit history, employment, and down payment funds before you can be pre-approved.
Why go through the extra paperwork of a pre-approval? It will allow you to lock in a specific interest rate for a period of time, so even if rates go up while you're house hunting, you'll still receive the rate you locked in at. Also, a pre approval will give you more negotiating power with the seller. The seller will know up front that you will be able to secure a loan to buy their property.
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