Why you need to be Pre-Approved
What is the difference between being pre-qualified and pre-approved?
There is a big difference between the two. If you are in the market for Anniston real estate or anywhere in the Gadsden or Talladega real estate area, you need to be well informed of your finances before setting out on that fun real estate journey.
Right now is an excellent time to buy as home prices are low and seller's are more inclined to accept reasonable offers even those with several contigencies.
But when you set out to buy a home or even just put in an offer, you need to be aware of the difference between simply thinking you can afford a home and knowing exactly how much home you can afford. (For more information on how much home you can afford see my Sedona real estate partner and this article on finances.)
By using an online Mortgage calculator and figuring out a simple mortgage payment you can determine how much in a payment you would need for a particular home. But that doesn't tell you with your income and debt ratio, that you actually can afford it. You may think you can but lenders will tell you something different.
Lenders will sit down with you and go over your:
- Income (including any rental income, alimony and child support)
- Debt (school loans, credit cards, loan payments, car payments, etc.)
- Liens (any outstanding debts that were never resolved)
- Bankruptcy (if any)
- Credit Score
- Job status
Once these factors come into play, it can be a whole new ball game about how much you actually can fit into your budget.
Lenders don't like to lend money on Alabama real estate where the mortgage payment is likely to be more than 28% of your income. Remember, you still have to make insurance payments, taxes, interest and any other repairs that come along on top of basic living expenses.
When it's all said and done, the Lender will give you a pre-approval letter stating that after careful overview of your finances you are indeed ready to purchase a home. This proves to sellers that you are serious about buying and have done the homework necessary to begin to be Alabama real estate owners.
When you are ready to buy or if you have questions on how to obtain a pre-approval letter, contact one of our Anniston AL real estate agents today. We can help with any and all real estate in Gadsden, Talladega, and all of Etowah and Calhoun county real estate.
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