What's the most important first step in purchasing your home?
If you are considering a purchase and would like to finance your home through a lender, then the best thing to do is know exactly where you stand. Getting pre-qualified, or better, pre-approved for a loan, is truly the first step when you are ready to purchase. You may discover you have better financing opportunities than you imagined, or that waiting a little while longer to build up credit or clear a lagging debt can make a very sound impact on your future.
Get Pre-Qualified: Pre-qualification acts as a dry run of the loan application process. The mortgage lender will use details you provide about your credit, income, assets and debts to arrive at an estimate of how much mortgage you can afford. The whole process may take only minutes or a few hours at most, and is free.
Most importantly - use a trusted, local mortgage specialist. Often larger banks will get the job done, but not without some communication lag time, or other deep level processing hiccups. A dedicated mortgage specialist knows how to anticipate typical market eccentricities - and will be much more nimble as well as responsive. Your success is their success.
Pre-Approval: What is the difference? While a pre-qualification from a bank suggests what you might be approved for, a pre-approval letter demonstrates the actual allowed financing in a formal letter. This is the letter you want to accompany your offer! While a "pre-qual" is non-binding to the lender (because the information you provide has not been verified), it does serve as a good indication to potential sellers of your general creditworthiness.
Therefore, when you make an offer to purchase, the seller considers first their risk in accepting one over another. Those with clearer financial backing remain the top choice.
Who is a good lender? I can provide the names of 3-4 reputable lenders who have proven themselves in my transactions and others whom I trust. Let's talk and I will be glad to share their information! Of course you can also get valuable input from friends and co-workers who recently purchased a home.