Buying a Home – Get Your Home Financing Approved Now

Money money moneySecure Your Loan Before You Fall in Love

Making application for your home financing prior to getting serious about a property is a must. You’re going to search high and low for the perfect home. Once you find it, you want to be sure you can actually buy it.

Qualifying – Two Important Numbers

There are two important limits to your purchasing power. One is the payment the lender will approve. The other is even more important, and that’s the monthly amount you are comfortable with. Many buyers find that they can qualify for a higher payment than they really want, given their lifestyles.

Once you find the payment you want to commit to, shop within the price range that keeps you in that comfort zone. Searching well over your price point and expecting sellers to come down 10 or 20% is a recipe for disappointment.

Stay Current with the Approval

Loan programs change constantly, as do the  requirements to qualify for a loan, so if you were pre-approved a year ago, take a new look at things. There is no simple answer anymore to the question of, “What is the interest rate?”

Your FICO score will determine your interest rate and loan terms.  In fact, recent regulations call for lenders to re-run credit just prior to closing, so borrowers who may have been qualified when their offer was accepted might find they are denied financing when it comes time to close.

Embrace Change, Just Not During Escrow

Be careful not to do anything to change your employment or debt status during escrow. The lender will call your employer on the day of funding and ask for you. If your employer says you no longer work there, your lender will say you no longer have a loan approval. See how these work together? 

The same principle applies to buying a new car or any major purchase. If you buy those items with cash, the re-verification of your available funds may be inadequate. If you buy on credit, new inquiries on your credit report may affect your FICO score (and your interest rate) adversely. The new debt may count against your ratios, which means you might no longer qualify for the loan amount or the interest rate you were expecting. Your loan approval is subject to review and re-verification until you close on the home.

If you have other questions, please check out our other posts in our Buying a Home series, or better yet, just ask!

In the meantime, go ahead and search for some homes! Let us know if we can help.

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