Pre-Approval: Your 1st Step in Buying a Home

Dated: 10/15/2018

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Pre-Approval: Your 1st Step in Buying a Home | MyKCM

In Dallas, Fort Worth, Keller, Saginaw, Watauga and most of North Tarrant Coungy, the number of buyers searching for their dream homes outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are in a market that is not as competitive, understanding your budget will give you the confidence of knowing if your dream home is within your reach.

Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you through this process. Many of those lenders have programs that may fit your specific situation and save you thousands of dollars.  Your REALTOR® may be able to steer you to a loan officer that offers programs with down payment assistance, favorable rates or programs that give you flexibility in balancing your up-front costs with the long term payment.

Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payent and residential history.”  You'll need your most recent paystubs, copies of your last few month's bank statements, and last two year's tax returns.  Self employed borrowers will need Profit and Loss states as well.  Your selected lender may even be able to counsel you on ways to improve your profile quickly to qualify for the best rates!

Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line

Many potential homebuyers overestimate the down payment and credit scores necessary to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so.  And having the pre-approval will insure your offer is in the range of affordability.

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Michael Dryden

Michael Dryden has helped North Tarrant County families buy and sell homes using the skills developed over more than fifty years of work experience and over 25 years in North Tarrant County. Michael....

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