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Don’t forget to pre-qualify before shopping for a home

If you’re planning to shop for a new home soon, it’s important for you to research your home-buying budget as part of your overall preparations for homeownership. Doing the math and seeing how your mortgage payment affects your cash will help you immensely. You’ll have a much better idea of what type of home you can afford, and which ones are out of your reach for now.

This is when a loan pre-qualification can be a big help

The ideal home buying budget will include more than the price of a property. You’ll also need to consider how much cash you have available for a down payment, and research the additional expenses that you’ll need to keep in mind. Also, any home can present its owner with an unexpected repair bill – and if it’s for a high-dollar item like an air conditioning or plumbing system, you’ll want to be prepared for this.

If you’re beginning to think that you could use a little help with planning your mortgage budget, contact us and ask us to assist you with pre-qualifying for a mortgage. This service is provided at no cost and will provide you with the numbers and assurance you need for a successful home shopping experience.

What a loan pre-qualification provides

Here at Caliber, a loan approval process generally begins with an informal meeting, or over the phone if you’re too busy to come by in person. You and your Loan Consultant will look at your current and future income and any long-term debts you’re managing. Ordering a copy of your current credit report is also part of the process.

After reviewing your income, debts and credit score, your Loan Consultant will be able to approximate the amount of loan funds Caliber may provide. This step is called pre-qualification.*

A pre-qualification helps you prepare for homeownership in several ways. In addition to having a clearer view of the type of home you can afford, you’ll save time by limiting your house viewing to properties you can afford. And when you’re ready to make an offer, a home seller may appreciate the fact that you’ve already done your home financing homework, and are serious about buying.

What’s all this about debt to income ratios?

When any lender reviews a mortgage application, they consider several factors that tell them more about your ability to repay the loan. To ensure your loan is truly affordable – not just now, but in the future – ask your Caliber Loan Consultant to calculate your monthly debt to Income ratios (often abbreviated to DTI ratio).

One type of DTI ratio looks at your gross monthly income and how much total monthly debt you’re currently managing. Another DTI ratio adds a proposed monthly mortgage payment to the monthly debts or replaces a current rental payment with a future mortgage payment. These help you decide how much of a loan you can comfortably manage and helps prevent future cash flow problems.

An overview of the benefits of a loan pre-qualification

  1. It will help determine the estimated mortgage loan amount for which you are eligible, and what will be truly affordable.
  2. Some Realtors® or real estate agents may encourage you to have a pre-qualification letter in hand before you begin to arrange appointments to view homes or begin attending open house events.
  3. It provides you with an estimated monthly mortgage payment, so you can compare your before- and after-purchase budgets and see how homeownership will affect your monthly cash flow.
  4. Being pre-qualified may increase your chances of winning a home bid or negotiating with a home seller. It proves you’ve already researched your budget with a professional Loan Consultant.
  5. It will help you reduce stress, costs and time by helping you be prepared. And if you find out that you can’t quite afford a home now, you’ll know what you need to do to reach your goal.

You’ll enjoy real peace of mind after you meet with a Caliber Loan Consultant. We’re ready to review your income, assets, and credit to help you be mortgage-ready and to answer your questions in everyday language. Let us help you pre-qualify for a mortgage today.

    *A pre-qualification is not an approval of credit and does not signify that underwriting requirements have been met. Be sure to ask your Caliber professional where you are in the process, as any documentation you may receive will use different terminology.  

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