I Want To Get Prequalified For A Home Loan – Do you want to buy a house but don’t know where to start? This article will review the 5 things you’ll need in advance to complete your home purchase!
1: Pre-approved for a home loan The first step in the home buying process is getting the money you need to buy the home. For most, this means qualifying for and getting a home loan. A mortgage is a loan used specifically to purchase a home.
I Want To Get Prequalified For A Home Loan
How to get pre-approved? You can search online or call us for lenders; We will be happy to give you a personal recommendation. The key is to find a mortgage lender that will help make the process as easy as possible for you. Once you find a lender you’re comfortable with, they’ll help you determine how much you can borrow and continue to help you throughout the buying process. Once approved and before you start looking for a property, your lender will prepare a pre-approval letter for you to share with real estate agents, sellers and home builders. This letter lets everyone know that you have gone through the home loan approval process and what the limitations of your loan are.
Four Things You’ll Need To Get Pre Approved For A Mortgage
2: Serious Money Now that you’re pre-approved for a home loan, you’ll need to fund your serious money. Serious money is what is given up front when buying a house. “I really want to buy your house, so I’m putting that money up with my offer,” he says.
The money earned depends on the total purchase price. $1,000 – $1,500 recommended for a home of $500,000 or less. For houses of $500,000 or more, the serious amount of money can be anywhere from 1% to 5%. Serious money is different, so it’s important to review this amount with your real estate agent.
If the sale goes as planned, your serious money will be credited to you at closing. If you rescind your purchase agreement within the credit inspection and appeal deadlines, you will usually get your serious money back. If you miss these deadlines, it is much more difficult to recover those funds. When serious money is raised, it is usually in the hands of the Land Registration Company or listing agent’s office.
3: Money for a down payment The third step in the home buying process is to raise money for a down payment. When you initially get pre-approved from your lender, they will tell you the estimated amount you need as a down payment. Some home loans, such as VA or USDA loans, do not require a down payment, so it is important to review your down payment with your lender. If you are buying OUTSIDE the Bozeman city limits, you could potentially qualify for a USDA Rural Development Mortgage loan with 0% down payment!
Basics Of Pre Approved Home Loans
Common down payments average between 3% and 5% of the total purchase price. However, if you already own a home and want to buy a second home, some lenders require a down payment of up to 20% (more than 25% of the down payment). There are many options available, and your lender will help you determine which loan is best for you.
4: Money for Closing Costs Now that you’ve pre-approved and determined your serious money and prepayment status, you need to set aside additional funds for closing costs. When you get a home loan, the mortgage company has the associated fees they charge to build your loan. These fees average between 1% and 4% of the loan, depending on the type of loan you have. This is another subject area that you will want to explore in detail with your lender directly.
As a Buyer, there are times when you can ask the Seller to contribute to your closing costs when you first write the purchase agreement. This option will depend on the local real estate market, the competitiveness of other offers and the Seller.
5: Home Inspection Money Once you’ve completed steps 1 through 4, you’ll need home inspection money. Once you’ve found your dream home and signed a contract with the seller, you’ll need to hire a home inspector.
Mortgage Preapproval: How To Do It
The average cost of a home inspection in Bozeman is $500 to $700 or more, depending on the size of the home and the scope of work required in the inspection. We typically write a 10-15 day inspection period which gives you as a Buyer time to hire a home inspector and enough time to make sure there are no major issues.
Depending on the home, you may want to hire an independent dealer to inspect your well, septic system, structural aspects, mold, and pest control. Please discuss these additional inspections with your real estate agent and they will guide you through these options. If you decide to do additional audits, make sure your Representative has written enough time on your Inspection Deadline to complete them all.
Bottom Line Buying a home is a big step and we want to make sure everything meets your expectations. This should be an exciting, non-stressful time for all parties involved. Call us to start finding the house of your dreams! Throughout this process, your real estate agent and your lender will be your two best people in this process.
If you feel overwhelmed and scared by this process, take a deep breath and call Tamara Williams at (406) 223-6823. We will help you reduce the stress and anxiety you feel. This should be a really fun and exciting time for you and having a real estate agent by your side to advocate for you and inform you that what you want is really what you need.
Difference Between Prequalified And Preapproved For A Home Loan
Facebook Share this post on Facebook Twitter Tweet this post on Twitter Email Send a link to email If you’re wondering if a mortgage pre-approval is required to buy a home, the short answer is no. It is not a legal requirement. However, if you plan to buy a foreclosed home, this paperwork can work in your favor when you make an offer. If there are any valuable home buying tips, getting your mortgage pre-approved and meeting with a reputable lender before you buy is one of them. Read on to find out why.
A mortgage pre-approval is a letter from your bank or lender that agrees to lend you a certain amount of dollars to buy a home.
The lender calculates your debt-to-income (DTI) ratio by dividing your total recurring monthly expenses by your gross monthly income to get a percentage. A good DTI is anything under 36%, but in general, banks can lend with a maximum DTI of 43%. Credit score, place of employment and documents are also checked and verified.
Mortgage pre-approval usually has a time limit, such as 90 days. Once this term expires, you must request another one. Mortgage pre-approval can take up to 5 business days to process.
What To Know Before Applying For A Home Loan [infographic]
Every situation is different, so it’s best to talk to several lenders to determine which one is best for you.
If you’re not sure how many homes you can buy, mortgage pre-approval gives you the confidence that you’re reviewing homes in your price range. You’ll know exactly how much you can borrow, and you won’t have to struggle to adjust your budget later. A mortgage calculator or lender can give you an estimate of your spending range. While this provides a quick estimate, it is not as valuable as a documented pre-approved amount.
If you think you’ll have trouble getting a mortgage after your offer has been accepted, it’s best to find out as soon as possible. Not everyone fits the mold lenders look for, you may be self-employed, starting a new job, or have a lower credit score. Therefore, you may need to spend more time and effort to get approved or seek help from a broker. But once it is approved, you will be relieved of the stress of having completed this step.
In an active real estate market, you need to be ahead of the game. A pre-approval letter shows buyers that you are a strong competitor and serious about buying. If there are other unapproved offers, yours will stand out, giving the seller more confidence that the deal won’t fall through.
How To Buy A Home In A Sellers Market
Typically, you will approach a lender or mortgage broker and fill out a loan application. Then simply provide all the necessary accompanying documents such as:
Don’t just contact one lender. When shopping around, you can compare banks to get the best possible rate. Using a mortgage broker can save you time searching and help you with your loan application. They also have relationships with many banks, so they can process your mortgage approval faster.
If you don’t have a mortgage pre-approval first, you can still go ahead and make an offer on the house. However, you will need to add a financial possibility.
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