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Determine the price range you can afford given your resources.
Mortgage pre-qualification or pre-approval is the
process that lenders go through with buyers to determine the most
appropriate loan program, the maximum monthly mortgage payment that you
would be allowed to make and the maximum loan you are qualified for.
A pre-approval involves an actual loan application,
pulling of a credit report from all three credit repositories,
verification of income and employment, an underwriter review of the
loan, and the issuance of an actual mortgage commitment subject to
getting a property under purchase and sale contract and having the
property appraise for at least the purchase price agreed to.
A pre-qualification, on the other hand, involves a
review of an in-file credit report often from only one or two credit
repositories, pay stubs, and W-2s. It generally doesn't involve a review
by an underwriter.
Pre-approval, being an actual mortgage commitment is a
less risky approach to knowing whether or not you can get a mortgage. As
a result, a pre-approval generally will give a homebuyer greater
leverage when negotiating a purchase of a specific home.
For more information on mortgage financing go to the
section titled, �Financing Options�.
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