Buyer Resources
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Deciding how much house you can afford
Before you start house hunting, you need to determine how much house you can afford, which will
entail getting preapproved for a home loan. A real estate agent can help you find a mortgage broker to
begin the process. While getting preapproved is a more in-depth process, a preapproval letter lets
both real estate agents and sellers know that you’re a serious shopper who means business.
What do I do to get preapproved?
Getting preapproved requires that the lender review your finances, confirming pay stubs, tax records,
credit accounts, bank statements and sometimes more. The preapproval amount will not only be a
reliable estimate of what you can afford, but your preapproval also indicates that a lender is willing to
do business with you, pending the purchase price, market appraisal and the underwriting process.
You can also get prequalified for a loan, which means that a lender has taken some information from
you, and made a tentative decision without necessarily verifying any of the information. Prequalification
provides you with a quick estimate of the amount you can afford, but is not considered as reliable as
preapproval.
What should I ask when shopping for a lender?
Your real estate agent should have a mortgage broker they are willing to put you in contact with — this
lender will be someone they have done business with in the past, and feel comfortable
recommending. However, if you decide to do a little comparison shopping and look for a lender on your
own, here are a few important questions to ask.
Before you start house hunting, you need to determine how much house you can afford, which will
entail getting preapproved for a home loan. A real estate agent can help you find a mortgage broker to
begin the process. While getting preapproved is a more in-depth process, a preapproval letter lets
both real estate agents and sellers know that you’re a serious shopper who means business.
What do I do to get preapproved?
Getting preapproved requires that the lender review your finances, confirming pay stubs, tax records,
credit accounts, bank statements and sometimes more. The preapproval amount will not only be a
reliable estimate of what you can afford, but your preapproval also indicates that a lender is willing to
do business with you, pending the purchase price, market appraisal and the underwriting process.
You can also get prequalified for a loan, which means that a lender has taken some information from
you, and made a tentative decision without necessarily verifying any of the information. Prequalification
provides you with a quick estimate of the amount you can afford, but is not considered as reliable as
preapproval.
What should I ask when shopping for a lender?
Your real estate agent should have a mortgage broker they are willing to put you in contact with — this
lender will be someone they have done business with in the past, and feel comfortable
recommending. However, if you decide to do a little comparison shopping and look for a lender on your
own, here are a few important questions to ask.
- What loan programs do you offer and which one do you think is best for me?
- How long will the loan approval process take?
- What line items of the loan agreement — if any — are negotiable?
- What is your policy for locking in interest rates, and will you honor a lower rate if it declines
during the lock-in period? - Are there fees for prepaying on my loan?
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All rights reserved. (2008-2010)
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