LOAN PRE-QUALIFICATION

One of the most frustrating situations to run into when house hunting is to find the perfect place, negotiate an offer everybody's happy with - and then not be able to qualify for the needed financing. The best way to avoid this is to pre-qualify for a mortgage through a lender before you even start looking at houses - so you're fully confident about what you can afford.

Use a lender
Pre-qualification through a lender doesn't have to commit you to finance your home through that same lender. Indeed, if anything it's simply a chance for the lending company to market its services. If you want, you can continue to shop for the best mortgage deal while you're house hunting. Your real estate agent can provide you the names of reputable lenders and set up a pre-qualification meeting.

Even after you're pre-qualified, it's worth moving forward with the loan application process as early in your house hunting as possible. This process is called pre-approval, and will make you most attractive to Sellers when your offer is presented.  The process is quick, with lenders requesting detailed information about your debts, assets and credit history. By starting early, everything can be in place when you find the right home.

Sellers know you're serious
In addition to clearly letting you know how much home you can afford, pre-approval lets home sellers know how serious you are. One of the first concerns a seller or listing agent has when an offer is submitted is: "Has the buyer been pre-approved?"

When it's a seller's market with multiple offers and quick sales, pre-approval through a lender is vital. And regardless of market conditions, pre-approval always increases a buyer's standing in comparison to buyers who are only pre-qualified. Sellers don't like having a property tied up in negotiations - only to have the transaction disintegrate in the 11th hour because the buyers don't qualify for the necessary financing.

Pre-qualify yourself
If you're not ready to talk to an agent or lender, you can pre-qualify yourself using the same basic formulas used by the mortgage industry. This will give you a good idea of your price range. But when it's time for serious shopping, it's worth knowing exactly what a lender thinks. And it's worth confirming that your credit history doesn't hold any surprises. An experienced real estate agent can help you through this process.  A good lender who is in the mortgage profession for the long haul, is quite happy to meet with you to help you establish your loan amount and help you clear up any issues which might keep you from the house of your dreams.  Strategizing so you will have a concrete understanding of what you can afford and how you can afford it:  a great idea for any of us.