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!
Cesi Pagano DRE 01043716
Keller Williams Realty DRE 01934115