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Finances

Houses are expensive. Probably the largest purchase you’ll ever make. That’s why very few prospective homeowners have enough cash on hand to purchase a home outright. Instead, most home buyers seek financing—a mortgage—to cover the difference between what they’ve saved, and what they need, to buy a home.

WHAT’S MY PRICE RANGE?
Determining how much house you can reasonably afford, and the size of your mortgage, requires carefully evaluating:

  1. Savings—how much have you set aside to cover a down payment on your home, as well as your closing costs?
  2. Affordability—how much can you safely borrow, and still meet all your financial obligations?
    A trained buyer’s representative can answer all your questions about factors to consider in evaluating your financing options and determining a reasonable price range for your home purchase.

 

Applying For a Mortgage
When selecting a lender, your goal is to obtain a mortgage loan with terms that are most favorable to your situation. In order to find the best home loan for you, contact several lenders to discuss the mortgages they offer, their rates, closing costs, and other fees. If you already have a mortgage, contact that institution too.

Mortgage loans are available from many sources, including:

  • Mortgage companies
  • Savings and loan associations
  • Banks
  • Credit unions

 

Your buyer’s representative may also be able to suggest loan providers that are offering competitive rates.

What’s the difference between being pre-qualified and pre-approved for a mortgage?
Typically you will first pre-qualify for a mortgage, then get pre-approved before you have found the specific home you wish to purchase. What is the difference?

Pre-qualification: An informal determination by a lender or mortgage broker stating how much mortgage you can afford.

Pre-approval: A guarantee in writing by a lender to grant you a loan up to a specified amount.

What are the advantages of being pre-approved?
There are two advantages of being pre-approved for a loan as early as possible in your home-buying process:

  1. Sellers will find any offer you make more attractive if you are pre-approved for a mortgage.
  2. The length of time before closing can be shorter if you’ve completed the steps to securing mortgage approval prior to signing a contract on a property.