Home Mortgage Loan » Prequalify for Home Loan

8 Jul

Before you spend too much time looking for a home to buy or looking for a real estate investment property, you really need to prequalify for home loan lenders. Without doing this, you won’t have a clear idea of what you can truly afford.

You need to see how a lending institution sees you. Your perspective is Yay- New Home; theirs is Hey- Risk Management.

The simple explanation here is your total monthly income minus all your monthly debts.
But you are going to need help to arrive at a working figure.
You can call your bank and speak to the loan officer there. Ask them to pull a credit report. In this report will be your FICO score, which is based upon a variety of information such as employment history, whether you own a home or not, and a few other things that will impact the amount of loan you can get.

There must also be some ready cash available for the closing costs – you must pay people for the procedure of transferring the loan title, initiating the loan, etc.
After you write down all your income, and subtract all your monthly payments, you can get your debt to income ratio. This is a very technical term the lenders use.
You still need to calculate in new expenses that the loan will initiate: The loan will not only include your principle (the actual price of the house), but also the interest on that amount, plus the real estate taxes on said property, plus the insurance on the property – the PITI. No bank or mortgage lender will allow you to borrow money without making sure these costs are built in – it helps them feel more secure about the debt.

Banks make their profit from interest on loans, so they will be glad to give you an estimate quickly. Just be sure you shop around for a competitive deal. Not all institutions lend alike. They are competing to get your business, so take advantage of this and get the best interest rate you can.

It’s a good idea to anticipate about how big a loan you will be able to get from a lending institution, That way, you won’t get your heart set on a house that you won’t be able to buy. Ouch!

Ever wonder how to go into a meeting with a lender for a home mortgage? This article can help you know what to expect.

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