Buying a Home?
Step 2. Get pre-approved for a mortgage loan!
You will need to determine how much home you can afford to buy and be sure you can qualify for a mortgage loan before you start looking at properties. Meet with a lender, or several lenders, to review your financial situation and your credit history and get an assessment of how much you can spend. If you aren’t qualified to purchase a home today, your lender can tell you how to improve your profile so you can buy in the future.
How do I choose a mortgage lender?
Ask for referrals from your friends, family and co-workers. Find out who they got their mortgage from, and what they liked and disliked about the process.
Check with the bank where you have your checking and savings accounts.
Compare rates, costs and programs among several lenders.
Get pre-approved, not just pre-qualified
A pre-qualification letter from a lender basically says that if everything you told the lender is correct, then you will be eligible to borrow $XXX to purchase a home. Far better is a pre-approval letter. With pre-approval, your employment and income, assets, liabilities and credit history documentation is obtained and reviewed. Generally a pre-approval letter is subject only to receipt of a copy of a signed purchase contract and an acceptable appraisal.
If you are serious about buying a home, the pre-approval letter gives you strong negotiating ammunition. Get your letter before you go house hunting.
Explore your potential for down payment assistance
There are several programs in Dane County that provide grants and loans for down payments and closing costs. Each program uses different eligibility criteria. Your lender can help determine if you qualify for these programs. Learn more about downpayment assistance.
Avoid mortgage loan mistakes
Carefully research available loan programs. Understand how the loan works. Can your rate and payment change? Is there a prepayment penalty?
Look closely at your income and budget. Consider your future plans.
Choose the loan that’s right for you. Don’t get sold more loan and more home than you can really afford.
--------------------------------------------------------------