Determining how much you can afford before you begin your home search will save you valuable time.
Prequalification vs. Preapproval
- Prequalifying for a mortgage generally helps you determine how much house you can afford.
- Most lenders require that your monthly mortgage payment, including principal, interest, taxes and insurance range between 25 and 28 percent of your gross monthly income.
- Remember, becoming prequalified does not necessarily mean that your will be approved for a loan of that amount.
- Preapproval from your lender means that you have provided them with the necessary paperwork, and they have approved your actual loan amount.
- Having preapproval for a home loan will put you in a much better negotiating position, because the seller knows that you are able to obtain your loan to purchase their home.
Down Payment
Most lenders require a 5 to 20 percent down payment; 25 percent or higher down payment may qualify you for a lower percentage rate.
I can help you locate a lender who will assist you in finding a financing package that best meets your needs.