Get a Mortgage Pre-Approval
An important ingredient in a successful home search is knowing how much you can afford. You don’t want to fall in love with a property only to find out it’s outside your price range. The good news is interest rates now are at multi-decade lows!
That’s why I recommend getting a Mortgage Pre-Approval if you plan to get a mortgage. This is a document from your bank or other lender stating how much of a mortgage they are willing to give you. There are two advantages to getting this pre-approval:
- It gives you the peace-of-mind of knowing you can afford homes you view on the market, and won’t have problems arranging financing.
- It’s a sign to sellers that you are a serious, prepared buyer – which gives you the edge when making an offer.
You can arrange for a Mortgage Pre-Approval with your bank or other lender, or by working with a good mortgage broker. I’m well-connected in the local real estate scene, so if you want me to recommend a reputable broker or lender, please contact me.
Alternatively, if you plan to pay cash for the property, your offer will be much stronger if you submit a “proof of funds” letter from your banker or financial adviser. Sometimes this will be required with a cash offer, but it always puts you in a better negotiating position if paying cash.
How Much Home Can You Afford?
Banks and lenders use specific criteria to determine how much of a mortgage they’re willing to offer you. They look at your income, expenses, credit history and employment status, as well as the down payment you plan to make on a home. It may seem like a scary process, but it is actually straightforward. You can usually get a Mortgage Pre-Approval in a day with minimal if any documentation. You’ll be glad that you did.
By knowing what you can afford, you can confidently shop within that price range. For example, if you qualify for a $250,000 mortgage, and you have another $150,000 available as a down payment, you can look for homes in the $400,000 – $430,000 range.
Have questions about arranging financing? Please submit the form below or call or email me.