Whether you are purchasing your first home or considering what a second home ‘could’ be, it’s very important to get pre-qualified. Most lenders can pre-qualify you within hours (if not minutes), which will help you get an idea of what you can afford for a mortgage payment.
Getting pre-qualified does NOT mean that you are pre-approved.
(i.e.) Today you rent and have a car payment and you have really good credit. You connect with a lender and get pre-qualified for $250,000. You’re so happy! While looking for a new home and so excited about leaving the rental market, you decide, “Hey, I need to update my vehicle.” And you go out and purchase (because you have great credit and a good job) a ‘used car’ for $20,000. You continue your search, find the perfect place to call home – only to find out that you are not approved.
While your financial snapshot may look a certain way today, tomorrow it can change. If you take out more debt or open another line of credit / credit card, you are directly effecting your credit score and debt in equity numbers, which helps a lender determine what you can afford for a mortgage payment.
Dedicating time to having a clear understanding of your financial snapshot is very important when considering to purchase a home. If you find yourself not being qualified today – that doesn’t mean you won’t qualify and be approved in 6 months – it just means you will have a plan and you’ll need to stick to that plan. Most lenders provide great insight as to what you can do to help improve your scores.
- Getting pre-qualified is very important when purchasing a home
- Pre-qualification does NOT equal pre-approval
- Avoid large purchases or opening lines of credit during this process
- Align with a realtor and lender that you trust
- If you’re currently not qualified to purchase a home
- understand your short / long term goals
- execute on that plan
- and you will soon find yourself, Approved!
My name is Cole Evans. I’m an Affiliate Broker with Compass Real Estate and I would be happy to help you find your next home, list your current home or help answer any questions you may have.