Home Financing

	Pre-Qualify:  Having a loan officer "run the numbers" to see if you fit into certain guidelines for a loan.
	Pre-Approval: Having a loan officer collect the proper information necessary for a lender's underwriter to issue a credit approval allowing you to be seen as a "cash buyer" in the seller's eyes.

It matters to 3 people involved in the transaction, YOU, Your AGENT, & the SELLER.

You: The most important beneficiary, of course, is you. Usually the first question asked us from buyers is, "How much can we afford?" They are stumped!  Why? There are simply too many variables--credit history, income, debt, down payments, closing costs, special mortgage programs and variations in qualifying guidelines between different mortgage types--to answer that question. The only sure way of getting the question answered is through pre-qualification. The mortgage pre-qualification step is a relatively simple one, but it is an important one. It begins the process of formally applying for a mortgage, and it gives everyone involved--especially you--a clear sense of the direction they should be headed.  This is followed by pre-approval.

Your Agent: By knowing what your financial parameters are, your Agent can spend more time looking for houses that "fit" and less time pursuing dead ends. No matter how much you might want a 3000 square foot home for $325,000, if your qualifications say $175,000, your qualifications say $175,000. When it comes to mortgages, "yes, but" doesn't carry much weight!

The Seller: Want to strengthen your bargaining position? Get pre-approved. Want your offer to stand out in a case of multiple offers for the same house? Get pre-approved. Look at it from the seller's perspective. If you had 2 offers on the table for your house, one from a fully pre-approved buyer and the other from an "I'll get around to that soon" buyer--to which offer would you devote the most attention? Even if the pre-approved buyer's offer was $1000 less, would you take the chance on the buyer that perhaps may not be qualified? When it comes to a seller evaluating offers, "a bird in the hand..." definitely applies.

It is important to remember that the amount of mortgage you will qualify for may be the maximum. It is the amount that the lender feels you can afford, but it is not necessarily the amount that you want to pay. It sometimes is advantageous to be conservative here. For example, if you qualify for a $200,000 mortgage and you have $15,000 available in cash for down payment and closing costs, you are qualified to buy homes with a maximum selling price of $210,000.  Any sales price less would still be approved and would lower your costs, your monthly payment, and your loan amount and you will pick what is comfortable for you.