Before you begin your home search, it is essential to get pre-approved by a qualified lender. Pre-approval is crucial so that you know what price range you can search in. There are some key differences between being pre-qualified by a lender and being pre-approved by a lender:
- Prequalification: This is based on the buyer’s information provided (verbally or by email/internet). Depending on the current market, a pre-qualified buyer will usually hold less clout than a pre-approved buyer when submitting your offer.
- Pre-approval: This is when the buyer is approved for a certain amount after the lender has verified their credit, income, and financials. A pre-approval letter presented with an offer constitutes a stronger offer in the seller’s eyes.
- Full Pre-Approval: An approval that is based on a full underwriting of the buyer – verification of income, verification of employment, all assets and debts assessed etc. This will make your offer nearly as good as a cash offer.
There are three key factors to consider when determining how much you can afford:
- Down Payment – Talk with your lender about various programs they offer depending on the down payment you can afford.
- Ability to Qualify for a Mortgage – It is vital you get pre-approved while considering various tax rates, Mello-Roos, special tax assessments, and Home Owners Association dues.
- Closing Costs Associated with the Purchase – Your lender will discuss lender fees, including appraisal and loan processing. At the same time, Cesi Pagano & Associates will review with you any additional closing costs associated with purchasing a home. Typically, the total closing costs range between 2-5% of your mortgage loan.
When a lender pre-approves you, they will discuss how much you are comfortable affording monthly, and they will help predict your monthly PITI payment, which is the sum of four payments:
(P) Principle on the loan
(I) Interest on the loan
(T) Property taxes
(I) Homeowners insurance
Fill out the form below and get your prequalification moving forward today!