Loan Prequalification #2040

When house hunting it is most frustrating to find the perfect place, negotiate an offer everybody's happy with and not qualify for the needed financing. The best way to avoid this situation to prequalify for a mortgage through a lender before you even start looking at houses.

Use a lender

Prequalification 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 prequalification meeting.

Even after you're prequalified, it's worth moving forward with the loan application process as early in your house hunting as possible. The process can be lengthy, with lenders requesting highly 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, prequalifying 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 prequalified?"

When it's a seller's market with multiple offers and quick sales, prequalification through a lender is vital. And regardless of market conditions, prequalification always increases a buyer's standing in comparison to buyers who aren't prequalified. 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.

Prequalify yourself

If you're not ready to talk to an agent or lender, you can prequalify 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.

How Much do I Need

There is no strict formula used by all lenders to determine a home loan amount, but a good working rule of thumb is that you can afford a home equal in price to three times your gross annual income. This formula, of course, needs to be adjusted to a number of factors:

•Amount of available cash for a down payment.

•Closing costs and cash reserves required by the lender

•Your outstanding debts (your total debt to income ratio should be under 40 percent)

•Your credit history

•The type of mortgage you select

•Current interest rates

Loan Prequalification Calculator

The calculator located at the internet address below helps you to determine how much you can borrow. It should be used to acquire an approximate amount. To get an exact amount you would need to contact a bank or lending organization. This calculator is based on a 30 year conventional mortgage.

Please point your Internet browser to http://www.remax.com/mort/mort0121.htm

or complete the following information and fax to Terry Farrell fax# 913-345-0245

Gross Annual Income: $ ________________________

Interest Rate: %__________________

Current outstanding Monthly debt: $ (Car payment, Student loan, Personal loan, etc.)________________________________

An easy to use prequalification work sheet is available on the fax back line. Please request reference #2040

Click here for the Mortgage tool library

Terry Farrell Re/Max Best Associates

913-339-0615 800-391-2378

Email: tfarrell@tfarrell.com Internet: www.tfarrell.com

This article was copied and pasted from Re/Max International's web site. www.remax.com