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You will need to know what your financial limits are before you shop for your new home. Many of our Clients require a mortgage for a home purchase, but are unsure of where to start. Your own financial institution is an excellent place to begin, though certainly not the only source for mortgage funds. Working with a professional you are comfortable with, and can trust, is key when searching for a mortgage that will suit your needs.

Once you decide which mortgage professional or financial institution to work with, the next step is applying for a mortgage loan. Normally this is a two-step process. The first step is a pre-approval, before you begin house hunting, and the second step is a firm approval once you have found, and offered on the property.

Pre-Qualified vs Pre-Approved

Chances are you’ve probably heard these terms before but are unsure of the differences.

Pre-qualified

Is a good estimate from your lender based on the information you supply. Keep in mind a pre-qualification does not include an analysis of your credit report or an in-depth look at your ability to purchase a home. In many cases, a pre-qualification can be done over the phone.

Pre-approved

You will complete an official application and supply the lender with necessary documentation to perform an extensive check of your financial health. Getting pre-approved for a mortgage enables you to move quickly when you find the perfect property. This is the most important step.

What Not to Do When Applying for a Mortgage:

  • Don’t purchase any big ticket items prior to your mortgage application such as a new car, furniture, major appliances, etc. Doing so may increase your debt-to-income ratio, thus jeopardizing your eligibility.
  • Don’t open any new credit cards. This also can jeopardize your debt-to-income ratio even if you don’t have a balance.
  • Don’t let multiple lenders check your credit history.
  • Don’t make job changes within six to eight months of buying.