Congratulations on making the decision of buying a new home! The first thing you need to decide is how much you can afford. Determining this early in the buying process will save you a lot of time and frustration. Not only will you have a clearer idea of the amount you can spend, but you can also eliminate all those homes that are not in your range. You may even find that being pre-approved opens the doors to a home you hadn’t considered before.

So, what’s the difference between Pre-Qualification and Pre-Approval? Pre-Qualification is a “guesstimate” of what a buyer might qualify for prior to actually submitting a mortgage application. Based on the unverified financial information you provide, the lender uses a quick calculation to arrive at a loan amount. Pre-Approval means that the lender has verified your financial information and has actually committed money in your name for a specific loan type and amount. With today’s technology, you can receive loan pre-approval in minutes.

With that in mind, let’s go over a few financing steps and a few tips to remember.

  • Know your credit rating. Contact a credit bureau and get a credit report on yourself, just to make sure your report is accurate. If you don’t like what you see, you will need to clean up any problem items or clear up any mistakes. You may want to consider contacting a consumer credit counselor for help.
  • Save, save, save. Skip a vacation, regular trips to the movies or dinners out to save money for a down payment and closing costs. Try not to buy anything on credit and, if you do, pay it off quickly. Try to avoid taking on another large credit expense or even applying for another credit card.
  • Get a pre-approval. It pays to get pre-approved for a mortgage early in the process. Some think pre-qualifying for a loan is enough, but it’s not. Pre-approval gives you more power when you’ve found that perfect house. You can close in as little as 15 days compared to the average 60 days for those that are not yet approved.

Related posts:

  1. Saving for a House While Living in an Apartment
  2. Buying Real Estate: Don’t Spend More Than You Can Afford
  3. Why You Should Get Mortgage Pre-Approval Before House Hunting
  4. House Hunting In The Washington, DC Area
  5. Know Whether You Can Afford Your First Home