Mortgage Pre-Qualification and Pre-Approval Cambridge MA
Mortgage Pre-Qualification and Pre-Approval
In buying a house, it is good to know your borrowing power, in other words, how expensive of a house you can afford.
There are two ways to figure out what your borrowing power is: pre-qualification and pre-approval. In order for you to be pre-qualified, you simply give your lender income, debt, and down payment information and they tell you what you can afford. This can even be done shortly over the phone without obligation to use that lender.
The pre-approval process is much more detailed because it gives you a specific dollar amount and is most often that last piece that must be placed into the puzzle before you can buy the home you want. Still the pre-approval process can be done overnight if the necessary paperworl is in place. Be careful of hot real estate because if you and another buyer are vying for the same house and they have been pre-approved and you have not, well, they win.
You do not have to use the same lender who pre-approved you to obtain a loan, but you will have to submit verification to the lender that you have been pre-approved.
You need to have the following ready when you go to get pre-approved:
Remember that if you use money as a gift from your parents or other relatives, you need to either leave it in the bank for two months or retrieve a letter stating that you were given money as a gift and not as a loan.
Taking the time to do the pre-qualification and pre-approval processes right will help you in obtaining the home you want.
Do you want to own or rent?
If you live in an apartment and decide to replace the carpet with tile, you put your security deposit in jeopardy, but if you do that in your own house, then that is just a nice change.
There are definite reasons to rent instead of buying a house:
The problem with renting, however, is that you have no control over rent changes and this makes long-term budgeting more difficult.
There are many positives to buying a home:
Whether renting or owning is cheaper depends on your market. Take into consideration the rare option of renting to own. It works as follows:
It is the same as a lease with one extra step. It usually takes one to two years for you to own your home, and you must pay a one time option consideration fee. All negotiations should be applied to the purchase of a home.
There are many things to consider when determining whether buying or renting is best for you, so make sure you take the time to understand both sides. Once you are well-informed, you can make a better decision.
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