It is really important to get pre-qualified for a home loan before you go out looking at homes with your real estate agent. This is usually a quick process that can often be done over the phone. Why is it important?
- You should look at homes in the right price range. You may end up disappointed and frustrated if you start by looking at homes that cost $250,000 and find out that you can get a loan for $200,000. By looking at the correct price range in the beginning your home search will go more quickly and smoothly.
- Not all homes can be purchased with all loans. A good example of this is FHA loans which a lot of first time home buyers use. The advantage to these is that they have a lower down payment than conventional loans. However, homes that need a lot of work will not qualify for an FHA loan. Also, for condominiums, the community must qualify for FHA approval.
- There are also other types of loan programs available that you should ask the lender about to see if you would qualify: down-payment assistance, VA loans, HUD 184 (Native American loan program), are a few of the special loan programs available.
- Talking with a lender at the beginning will also let you know if you need to save up additional money for a down payment or build/repair your credit history prior to starting your home search.
So talk with your lender first. Then tell your real estate agent what type of loan that you plan to get and the price range of homes you want to consider. If you don’t have a lender, your real estate should be able to give you names of lenders he has worked with in the past that have done a good job.