Mortgage Pre-Qualification to Homeownership in 6 Easy Steps

By Craig Donofrio | Nov 5, 2019 - Realtor.com

For many home buyers, mortgage pre-qualification is the first step to buying a house. But you shouldn't put your feet up after the first step and expect everything to just fall into place: There's plenty more to be done. Here’s a straightforward guide for going from pre-qualified buyer to homeowner the smart way.

Step 1: Mortgage pre-qualification

The mortgage pre-qualification process is quick and free. It should take less than an hour. During the process, you speak with a loan officer and answer questions about your financial situation.

Mortgage pre-qualification will give you a rough estimate of how much house you can afford. It’s not a binding agreement — it’s simply something you can use to gauge your buying capability.

Step 2: Mortgage pre-approval

After you're pre-qualified, your next step is to get pre-approved. This is an in-depth process. You'll need to submit paperwork about your income, assets, employment history and residency status to a lender.

Getting pre-approved is almost like applying for a real loan, but it happens before you select a home.

Step 3: Shopping for a home

Now it's time for the fun part: home shopping. Using your pre-approval amount as a guide, shop for homes within your budget.

Since sellers and Realtors view pre-approved buyers more favorably, shop with confidence. You'll come across as a much more serious buyer than any non pre-approved competitors.

Step 4: Put in an offer to buy a home

Once you find a home you want to buy, the next step will be to put in an offer. If your offer is accepted, you'll need to apply for a loan. The mortgage process can take some time, but since you’ve been pre-approved, the process may be faster because the lender will have all or almost all of your needed documents.

However, if too much time has passed since you were pre-approved, you'll need to provide fresh bank statements and document updates.

Step 5. Maintain your financial profile

Be aware that changes in your financial situation can affect pre-approval. When you’re in the process of obtaining a loan, do not do the following:

• Take out on any new debts or make big purchases.
• Switch jobs.
• Change careers.
• Make any big life changes that could put your financial capabilities in question.

If you’re looking to change jobs or buy something expensive, wait until after closing.

If all goes well, you will be cleared to close — meaning you are fully approved. You'll get a date for closing. During closing, you'll sign and double-check mortgage documents.

If anything looks different than you were promised, don't be afraid to back out; it's better to leave a bad deal than to be locked into one.

Step 6: Get the keys

When those papers are signed, you can grab your new keys. Now you're a homeowner. Congratulations!

It's time to transfer the utilities, move in and make your new house your own.

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