Often I’ve ran into buyers who dive directly into the home search process without knowing exactly how much of a home they can afford and qualify for. They might qualify for a certain loan amount, but the more pressing question is – will that monthly payment put a strain on their budget?
Very often the end results were not what they expected – for better or worse. Sometimes buyers will find, after being pre-approved, that either they can’t qualify for a home they want, or qualify for homes that they originally thought were out of their reach.
The very first step is to first contact a lender (if you don’t know one, ask your family, friends and/or realtor) for a pre-approval or pre-qualification letter. The lender will usually ask for your pay stubs, tax returns, and bank statements. This way, not only will you know your price range, but also decide on how much monthly mortgage payments you want to take on so that you don’t overstretch your budget. Lenders will sometimes help you qualify for a higher loan from sources you might not be aware of, such as gift funds or using rental property income, etc.
If you haven’t already, contact an experienced real estate agent. A qualified real estate agent will be able to provide info about the state of the market, strategies on how to approach offers, and offer knowledge and insights about neighborhoods and the transaction itself.
In summary, before you start looking at homes on the market, it would be prudent to first talk to a real estate agent who can guide you in the right direction.
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