November 6th, 2014 9:58 AM by Jackie A. Graves
For many home buyers, pre-qualification is the first step to buying a
But you shouldn’t put your feet up after the first step and
expect everything to just fall into place: There’s plenty more
to be done.
Here’s a straightforward guide for going from pre-qualified
buyer to homeowner the smart way.
Step 1: Pre-Qualification
The pre-qualification process is quick and free. It should take less
than an hour. During the process, you speak with a loan officer and answer
questions about your financial situation.
Pre-qualification will give you a rough estimate of how much house
you can afford. It’s not a binding agreement—it’s simply something
you can use to gauge your buying capability.
Pre-qualification can be especially useful if you’re not sure you can afford a
Step 2: Pre-Approval
After you’re pre-qualified, your next step is to get
pre-approved. This is an in-depth process. You’ll need to
submit paperwork about
your income, assets, employment history and residency status to a lender.
Getting pre-approved is almost like applying for a real loan, but it
happens before you select a home.
Step 3: Shop
Now it’s time for the fun part: home shopping. Using
your pre-approval amount as a guide, shop for homes within your budget.
Since sellers and REALTORS® view pre-approved
buyers more favorably, shop with confidence. You’ll
come across as a much more serious buyer than any non pre-approved
Step 4: Put in an Offer
Once you find a home you want to buy, the next step will be to put in an offer.
If your offer is accepted, you’ll need to apply for a loan.
The mortgage process can take some time, but since you’ve been pre-approved,
the process may be faster because the lender will have all or almost all of
your needed documents.
However, if too much time has passed since you were pre-approved, you’ll
need to provide fresh bank statements and document updates.
Step 5. Maintain Your Financial Profile
Be aware that changes in your
financial situation can affect pre-approval. When you’re in the
process of obtaining a loan, do not do the following:
Take out on any new debts or make big
Make any big life changes that could put your
financial capabilities in question.
If you’re looking to change jobs or buy something expensive, wait until
If all goes well, you will be cleared to close—meaning you are fully
approved. You’ll get a date for closing. During closing,
you’ll sign and double-check mortgage documents.
If anything looks different than you were promised, don’t be afraid to
back out; it’s better to leave a bad deal than to be locked into one.
Step 6. Get the Keys
When those papers are signed, you can grab your new keys. Now
you’re a homeowner—congratulations!
It’s time to transfer the utilities,
move in and make your new house your own.
By: Craig Donofrio | Updated from an earlier version by Laura
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