Home Buying with Guro: Demystifying the Pre-Approval
You have decided to take the big step into homeownership, but do you know if you actually can afford to buy a home? Nothing is more disappointing than to find your dream home and then realize you don’t have enough money or don’t qualify for a loan!
Talk to a lender!
What’s the first question I ask my clients? Are you pre-approved?! Getting pre-approval is essential to the home buying process. It guarantees how much home you can afford and is a valuable tool for both myself and the homebuyer.
Getting pre-approval is easy, with most lenders allowing for online applications. The process takes only a few minutes and doesn’t involve much legwork on your part. Essentially, the lender will provide you with a pre-approval based on a few key factors such as your income, credit score, and debt to income ratio. Then boom - you have your pre-approval! Not only do you (and I) know how much home you can afford, but you also have a valuable tool in this competitive real estate market.
Ready to get pre-approved? Click here for a list of some great Birmingham lenders!
Watch what you spend.
After you get pre-approved, don’t make any large purchases. I repeat - after your pre-approval, DO NOT make any big purchases! Any significant change to your financial situation or income is an automatic red flag to your lender. Before making any substantial changes to your job, life, or whatever, make sure to discuss it with your lender first.
Cash is (always) king.
Ever heard the saying ‘money talk’? Well, it’s true - especially in real estate. If you’re a cash buyer, make sure to ask your bank for a ‘proof of funding’ letter. The letter will work much like your pre-approval as proof to the seller that you’re serious about purchasing and can afford it.
What are the benefits of being a cash buyer? Your offer is not contingent upon final approval from a lender, there’s no appraisal needed, you’ll have a stronger stance as a buyer, and closing costs will be lower.
Still have questions about pre-approval? I’m happy to answer them! Still have questions? Then you can email, call, or text me!
Or swing by my First-time Home Buyer Seminar at Saturn March 6th from 10AM-12AM.
Guro Midtsund is a Realtor with eXp Realty, LLC in Birmingham, AL. This information is deemed reliable but not guaranteed.