Get pre-approved for your loan

Before you search for a home, one of the first questions to ask is how much you can afford to pay for a home. Getting pre-approved with a legitimate lender can give a clear indication of your maximum loan amount. Pre-approval means actually applying for a mortgage through a formal application process, and is different from pre-qualification. Pre-approval gives you credibility as a buyer and confirms your ability to qualify for a loan to purchase a sellers’ property.

Research your options

There are a wide variety of home lending programs, with varying interest rates and down payments depending on your qualifications as a borrower. Ask questions. Research is the key to finding the right type of loan to suit your needs. It is helpful to consider market conditions, your long-term investment goals, and the importance of having a fixed or variable monthly payment. It is also best to determine a monthly amount you can commit to prior to speaking with a lender, and avoid paying more than you budgeted because of a selecting dream home that’s out of financial reach.

Understand your financial situation

Financing for your home purchase is dependent on many factors such as the loan amount and duration, interest rates, credit history, down payment, financing sources and more. Request a credit history analysis in order to fix problems and prepare for meetings with lending providers. While loan programs vary in their down payment requirements, it is worth noting that the amount of deposit committed with an offer can sometimes sway acceptance in a competitive bid situation with multiple buyers. The more you know about your personal finances and how they can impact your ability to qualify for a loan, can help you establish realistic expectations and goals for your home buying experience.

Avoid major purchases

Avoid making major purchases and minimize your debt load prior to buying a home, as your complete financial picture (gross monthly income, debt, and credit history, etc.) will impact the mortgage amount you can qualify for. Credit card debt works against your home eligibility, so it’s important to resist the urge to spend or apply for credit until after your purchase.