If you are financing the purchase of a home, your first step should be to find out whether you qualify for a mortgage, and the second step should be to pinpoint how much you can afford. Both of those steps can be accomplished by getting prequalified.
Before you do so, here’s the most important thing to remember about a mortgage prequalification: A prequalification at one place does not equal one at another.
Since a prequalification is a simple, quick process (CLICK HERE to learn what a prequalification is), the amount of money you are told that you can borrow does not necessarily mean you will get approved by an underwriter for that amount. Many places will glance at your financial picture and ramble off a loan amount. This is a flawed process that can lead to heartache when you put an offer on a house, only to discover later you cannot get a big enough loan to buy it.
The more-accurate way is to figure out how much of a monthly mortgage payment you can afford, as it typically includes principal, homeowner’s insurance, taxes and possibly mortgage insurance. For instance, two homes cost the same amount to buy, but one has higher insurance and property taxes. The house carrying higher insurance and taxes would have a higher monthly mortgage payment. If they were high enough, then it could be too costly for your monthly budget.
Diligent mortgage loan officers will prequalify you based off of a monthly payment after reviewing your tax returns, pay stubs, credit report and/or any other relevant documentation (each person’s situation is different, so some documentation may or may not be required).
The Florida Mortgage Firm requires its loan officers to be thorough and diligent with the prequalification process. If you have any questions about this, call us at 813.707.6200.
Happy house hunting.