Pre-Qualify to Purchase Home

For some people, their dream home is always unaffordable. This is primarily because they do not take stringent steps to pre-qualify before rushing out to search for a home. A pre-qualification is, basically, an estimate of how much you can actually afford. Once, you know that you can effortlessly track down a house that fits in your budget. Furthermore, as a pre-qualification denotes that your creditworthiness has been proven by a financial institution, it becomes relatively easy for you to negotiate with the seller more aggressively. The seller, on the other hand, gets the assurance that you are a genuine buyer, and takes you seriously. Here are a few things that you need to do to pre-qualify to purchase a home.

o Enlist your monthly expenses- The first thing that you need to do is to note down all your monthly expenses. The list should include the regular telephone, electricity, gas and grocery bills. School fees, transportation costs, house rent, maintenance charges, and so forth should also be included in the list. Yearly expenses pertaining to property taxes, homeowners and auto insurance, and license plates should be added to the list, but only after dividing them by 12.

o Find out your monthly sources of income- Your salary is the primary source of income. Additionally, all the money coming from part-time jobs should be included. Any monthly interest you are earning from your investments should also be added.

o Try to ascertain how much you can actually afford to pay- Add your expenses as well as your income. Subtract the total expenses from the total income. You will get to know how much you can actually afford to pay. With the help of a mortgage calculator, you can easily calculate the exact amount of home loan that you can manage to payback. These mortgage calculators are easily available online. You can also buy an amortization book to learn how to calculate your monthly mortgage payments depending upon the interest rates and the number of years chosen to payoff.

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o Contact the mortgage lender- After all the preparations, you should contact the mortgage lender, and tell him exactly what you need. Allow him to check your creditworthiness, and thereafter let him give you a quotation. As there are several options available; hence shop around a bit. This will help you to ascertain what other lenders are wiling to offer. Go for the best quotation. Even if the mortgage lender is ready to offer you more, stick to your terms and conditions because at the end of the day you would have to payback whatever you have borrowed. So the more you borrow, the more you would have to payback together with the interest.

o Get the pre-qualification letter- As soon as you find an offer that matches with your pre-conditions, grab the offer. Ask the lender to lock the current rate the moment you pre-qualify. The mortgage lender will issue a pre-qualification letter. A copy of this letter will also be sent to the real estate agent who is helping you in your home search. Homeowners will welcome you with open arms, once they come to know that a good mortgage company is waiting to provide you home loan. This is the magic of a pre-qualification letter.