Has anyone taken the time to explain how buying a home actually works? If not, you are in good company. Most people never get a clear walkthrough, so here is the first and most important step: pre-approval.
What pre-approval does
Pre-approval takes the monthly payment you are comfortable with, which for many people starts with what they pay in rent, and turns it into a price range you can shop in. It also tells you how much cash you will need at settlement, and a lender can check whether any low-down-payment or no-money-down programs apply to you.
Buying power depends on where you buy
What you can afford varies by state, because property taxes are different from one place to the next. That is one reason a number that works in one market may look different across the state line.
Pre-approval is not final approval
It is an important first step, but it is not the last one. Underwriting follows once your offer is accepted, and that is where the lender looks closely at the details. Expect a lot of paperwork. Lenders ask for plenty, and it goes more smoothly when you know to expect it.
Why it comes before the search
Knowing your range and your cash needs first means you shop for homes that fit, and your offer carries more weight when a seller can see you are ready.
How the search should work
Keep your criteria broad. Details like hardwood floors are often left out of listings, so filtering too tightly can hide the home you would have loved. Set up a wide search, and expect that you will likely find the right home before anyone else points it out to you.
What to do next
Talk with a lender about pre-approval, then talk with your agent about the search. When you are ready, tell us what you are looking for and a Foraker agent will walk you through the rest.
