Buying a home this year? Getting a loan is a pre-requisite. Considering the strict requirements of lenders and the fact that your FICO score must be close to perfect, this may scare you. Proceed about it the right way, and you will be able to get to the end of it quite successfully.
So what do you do? Search for a house first or initiate the loan process? It is actually the latter. Once you know the amount you can get from a lender, you can start finding your dream home.
We know you are excited about searching for your dream home, but before you do this, figure out your affordability. You really will not want to buy a house that you cannot afford later on. For this, you can get a lender prequalification, which will give you a rough range of the loan amount which you should borrow. Please note this is not secure financing, and the lender has no obligation to you.
And then the preapproval
A preapproval is secure financing and will appear attractive to sellers because the deal will be closed in a shorter time. Your chosen lender will evaluate your financial situation, do the necessary paperwork and accordingly will provide you the details of your loan. At this stage, you will know the loan amount which the lender will give you and the rate at which you will have to pay any interest back on it.
Start searching for a house
You are probably aware of how tight the home inventory has been all this year. And the homes that are on the market are priced too high. If you are a buyer in the lower end of the market, you will have a difficult time in searching for a suitable house. Hire a skilled real estate agent and they will make things easy for you.
One more point to note: whichever home you choose, it should be within the limit the lender has agreed to give you. Stay below it because unexpected costs can always arise.
Dealing with the appraisals
Okay, so you have finally found the home you like, but the process is still not over yet. If you make it through the appraisal, you will be able to secure the deal. What if you do not? Unfortunately, you will not have many choices other than asking them to appeal the appraisal and requesting another one.