Getting Pre-Approved
The main issue with financing a home is not always in getting a loan, but in getting the loan that's right for you - the loan with the best terms and the lowest costs. The best way to look at your loan options is to meet with a lender. The lender will be able to tell you how much you can afford and which loan program is best for you and your goals. When you find out how much of a home you want to afford, you can narrow your home search to certain neighborhoods and houses.
After you have met with the loan officer, and he has reviewed your finances, the loan officer will let you know what mortgage program and loan amount that he believes you can qualify for. The lender will provide a pre-approval letter, which shows your borrowing power.
The pre-approval letter is not a final commitment for a loan, but it is necessary to have when submitting an offer, and even sometimes a requirement when wanting to look at homes with a buyer's agent. It shows that you have the finances, and ability, to complete a home purchase. Otherwise, you may be wasting your time, in addition to the time of agents and sellers. Sellers do not want to accept an offer, and go into escrow, with the chance that the completion of the purchase will fail because the buyer cannot obtain financing.
Also, if you don't meet with a loan officer in advance, and then you find a home you wish to purchase, you may be rushed into making financing decisions that are not best for you. You will have to quickly find a lender, have your credit checked, and identify a loan program.
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