For Home Buyers

In the past, pre-qualification meant that the lender looked at your numbers but never ran your credit. Pre-approval meant that the lender checked your numbers carefully. These days, some lenders do all of the work and still call it pre-qualification, so this is not always accurate. As it stands today, listing agents hate accepting pre-qualifications. They much prefer pre-approval. In a multiple offer situation you might hurt your odds if you only have pre-qualification instead of pre-approval. Always ask your lender to give you a pre-approval!

It gives you an idea but the number is not set in stone. 1. Lenders guess what your taxes, HOA, insurance, etc. will be. For example: If they used $5000 for taxes and you want something that has $7000 in taxes, then most likely you can afford something $20,000 less. Check with your lender again once you find that perfect home. 2. Interest rates change every day and the only way to lock them in is to deliver a signed contract to your lender. 3. Never buy at your limits. Lenders don’t care if you will be house-poor 6 months from now. Always buy as much below as possible.

According to a survey by Nerdwallet, 49% of home buyers had regrets about their home-buying process. It’s OK to have small regrets about space or lack of larger yard. Just make sure you don’t have any regrets about the mortgage or monthly payments as that is the most painful regret.

Too many people focus on the home price and try to save $5-10K on the purchase price. That’s great, but at the same time not enough people shop around for the right lender. A small difference interest rates could save 20-30K over thirty years.