How Homebuyers Get Pre-Approved for a Loan
Here’s how a buyer begins the loan pre-approval process.
In the last episode of our homebuyer’s guide series, we spoke about finding an agent, going over needs and wants, and selecting different types of homes. Today we’ll be jumping into the next step: getting pre-approved for a loan.
To start this process, you sit down with a lender to figure out what you can afford. They’ll look at three key items to determine what you can get on a loan: income, credit score, and debt. They calculate different factors, such as your debt-to-income ratio, and give you a purchase price. Generally, the purchase price is the maximum you can afford to pay for a home. Most people don’t want to spend the max amount, but it’s good to know this cap because it allows you to find a price range that you’ll be comfortable in.
Generally, the purchase price is the maximum you can afford to pay for a home.
Oftentimes, our clients get excited because they find out they can afford more than they expected. This frees up their options and allows them to choose something that suits their wants and needs—without going far above their budget.
If you have any questions about this or anything else related to real estate, feel free to reach out to me. I look forward to hearing from you soon.