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What is pre-qualifying?
Pre-qualifying is a simple 5 minute phone call to a lender. He will ask you a few questions about your income, your monthly bills, and check your credit score. After he examines your credit rating, how much you make vs rent, car payments, loans and credit card debt, he will then be able to determine how much you will be able to afford for a monthly house payment, and this establishes the amount you will be loaned for a home purchase.
Why do you need to do it?
Simply it determines the amount we have to work with when looking for a home.
If you think you can afford a $300,000.00 home, and we go look at a few, you fall in love with one. Now you speak with a lender and the process reveals you can only qualify for a $220,000.00 loan, you are going to be very disappointed. However if the bank determines you qualify for a $350,000.00, we can view a little more expensive home. Either way, your time spent has been unproductive. I have either shown you homes you can't afford, or homes that just fell short of what you really wanted.
Pre-qualifying benefits both you and I.
If I qualify for a $300,000.00 home do I need to spend that much?
Absolutely not!
My advice is to work backwards. Tell your lender what you can comfortably afford each month for a loan payment. Don't forget taxes and insurance will be added on in monthly installments. This can increase your payment by a couple of hundred dollars a month. HOA's (Home Owners Associations) is another monthly expense to consider.
Most condos and newer communities have monthly HOA's. This is paid for the upkeep and maintenance of the common community grounds. Always read your HOA documents to see what you are being charged for, and what your responsibilities are as a member of the community.
Now once we know what your loan maximum is, it is my job to find you a home that meets all your criteria, a home you will love, and not necessarily reach your maximum loan amount.
My ultimate goal is to help you buy a home you not only love, but can afford.
So please, just because the loan company says you are eligible for a certain amount, consider the monthly amount you are comfortable with, and work from there.
In the long run, you will be happier and so will I!
There are plenty of great homes to choose from no matter what your price range.
If you would like to see homes available through the Metro Denver MLS, please visit my web site for unlimited free home searches.
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