Once you've done the basic calculations and completed a financial statement, you can ask a lender or loan broker for a prequalification letter saying that loan approval for a specified amount is likely based on your income and credit history. Pre-qualifying lets you determine exactly how much you'll be able to borrow and how much you'll need for a down payment and closing costs.
Unless you're in a very slow real estate market, with a lot more sellers than buyers, you will want to do more than pre-qualify for a loan: you will want to be pre-approved (that is, guaranteed) for a specific loan amount. This means a lender has already checked your credit and evaluated your financial situation, rather than simply relied on your own statement about your income and debts.
Pre-approval means that the lender would actually fund the loan, pending an appraisal of the property, title report, and purchase contract. Having a lender pre-approve you for a loan is crucial in a competitive market -- without it, you stand little chance of your offer being accepted.
Getting pre-approval will save you from disappointment later, by sparing you from getting your hopes up on property that was never truly in your price range.
Getting your financing pre-approved ahead of time can also save yourself from wasting expenses like home inspections and appraisals on homes that you are not truly capable or qualified to purchase.
Please contact Chris Cyca with your inquiries.
Related article: Check Your Credit History >>
Let me help you find your next home, I know how important a decision it is.
Receive my monthly newsletter with Kelowna real estate updates, tips, promotions, and other helpful info.
ChrisCyca.com is your premier spot for quality Real Estate.