Home Loan Pre-approval
If you’re not paying all cash for your new home, a home loan pre-approval will guarantee that you will have a welcome mat waiting for you at any property within your price range. The financial institution that’s going to loan you the money for a new home will be your best friend, so you should contact The Lesti Team for referrals to home loan lenders. Several factors will be considered by the funding entity of your choice, before you are issued a statement regarding the amount of loan you qualify for. The amount will be based partially on a maximum of 30% of your gross monthly income. As a general rule, no more than about 36% of your income should go toward your house payment and other long-term debt.
Your total monthly house payment, which will include principal, interest, taxes and insurance (PITI) will be calculated according to different formulas by different lenders. There will likely be additional costs if your down payment will be less than 20%, or if there are expenses such as homeowners’ association dues.
The Preapproval Letter
Obtaining a pre-approval letter can be a cumbersome procedure, but it will definitely provide an advantage when it comes to buying a home. The process can provide a good indication of:
· Down payment needed
· Closing costs
· PITI (principal, interest, taxes and insurance)
· Type of loan that is best for you
· Available home buyers and owners programs,such as those for veterans, first-time buyers, teachers, and so on.
Materials your lender will need, include:
· Your income history and proof of current employment (including recent pay stubs)
· Monthly debts
· The amount and source of cash you have available for your down payment and closing costs
Lenders are not bound by pre-approval letters, however, since there is always the possibility of changes in your income, debts, overall financial situation and interest rates, to name a few variables. A final decision will be made once you choose a home you want to buy. The lender will appraise the property and consider several variables before making the decision to loan the funds for its purchase. The Lesti Team can offer advice and recommendations regarding lenders, as well as the specifics of making an offer on a home.