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Obtain Pre-Approval
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Back to Buying
Obtain Pre-approval.
Visit your financial or lending institution prior to home buying. Quickly, you'll know the amount of mortgage you'll receive. Be sure to get a mortgage commitment in writing. Most important, sellers will know that you are a serious prospect. Depending upon market conditions, a seller may lean towards an unconditional offer. You'll have less negotiating power if you have to wait for mortgage approval. Banks and financial institutions have developed many programs especially for homebuyers, be that first-time buyers or those with equity in their homes. When you review your needs and objectives with a lending officer, you'll be one step closer to purchasing your home.
To determine how much home you can afford, talk to a lender or go online and use a "home affordability" calculator. Good calculators will give you a range of what you may qualify for. Then call a lender. While some may say that the "28/36" rule applies, in today's home mortgage market, lenders are making loans customized to a particular person's situation. The "28/36" rule means that your monthly housing costs can't exceed 28 percent of your income and your total debt load can't exceed 36 percent of your total monthly income. Depending on your assets, credit history, job potential and other factors, lenders can push the ratios up to 40-60% or higher. While we're not advocating you purchase a home utilizing the higher ratios, it's important for you to know your options.
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