Before meeting with a mortgage lender, it is important to first do the following:
1. Calculate your income and monthly debt obligations
2. Check your credit score
3. Determine a mortgage budget
4. Find a down payment
The first step in getting approved for a loan is setting your parameters and expectations. Using your budget, try and conceptualize a general amount you are looking to spend on a new home. When thinking about the amount you will be asking to be pre-approved by a lender, it may be useful to target the upper-end of your budget, allowing more flexibility in your home-buying process and avoiding the need to get approved for a second time. Your mortgage lender will typically require at least a 10% down payment of the total amount you request. However, this amount may be lower or higher depending on the type of loan in question, any special programs, and credit-related issues.
The next step in the approval process is to meet with the actual lenders. Popular lenders include Wells Fargo and Bank of America. Simply call a branch location and schedule a meeting with a banker. When speaking with a banker, keep in mind that a pre-approval, which takes a more thorough look at your credit history, income, assets, and debts, is different than a pre-qualification. A pre-qualification or “pre-qual” is an informal, non-binding opinion by a given lender who believes that, based on your income, credit score, and verification, you should be approved for a given mortgage.
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