When you decide the time is right to buy a home it can be one of the biggest decisions you will ever make. It is an exciting time. But, before making decisions too quickly, you need to be cautious and take the proper financial steps to ensure your financial investment is successful. You must have your financial affairs in order and know what you can afford.
The first thing you should do when considering the purchase of a home is to prequalify for a mortgage. There is no cost associated with the prequalification process. Your mortgage lender will need your financial information such as income verification, property appraisal and credit history. After going through your finances, your lender will begin the process and will be able to tell you how much you will be able to borrow. By going through the prequalification process, you will know exactly how much you can afford, saving you the trouble of looking at homes that are out of your price range. Prequalifying has a few benefits. First, it will give you the power to negotiate with a seller which may save you thousands of dollars. Second, prequalified buyers are given preference over others in a multiple offer situation. Also, you will need to be prequalified in order to work with a realtor. Finally, you will be applying for the correct loan amount based on your prequalification.
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