My husband and I are considering moving to Arizona. We love living in Texas, but there are factors that make a move to Arizona very attractive. That means that we have the arduous chores of selling our house in Texas and buying one in Arizona.
The first step on this journey is deciding on an area to shop for a home. Once you know where you want to go you can start looking in earnest at available homes. This is when your eyes can prove to be bigger than your stomach and you might end up looking at homes out of your price range.
How do you know how much house you can afford? You must take a look at your bills. You know what you’re paying each month for your rent or current mortgage. Is there more money at the end of the month or is there too much month for the money? You don’t need a mortgage broker to tell you that. In the initial stages of home shopping, you do need a lender to give you a pre-approval letter. A pre-approval letter tells you and the seller that the lender is confident that you can afford a certain amount of house. How does the lender come to this conclusion? It looks at the information you’ve supplied.
Will a pre-qualification letter do the same job? The terms might seem interchangeable, but a pre-qualification is more of a guess. More research and verification has gone into the writing of a pre-approval letter. The pre-approval is a more accurate representation of the home you can expect to buy.
Unfortunately, a pre-approval is not a guarantee of actual loan approval. Do your homework to assure that you can afford the home you want and you’re not biting off more loan than you can chew.