Three Steps to Homeownership
Step 1: Get pre-qualified.
Before buying a home, you’ll want to understand your financial situation so you can budget for your home. That’s where pre-qualification comes in. It’s quick and easy to do. You’ll need to provide some basic financial information, such as debt, income, and assets.
Your lender will then take that information to provide a rough estimate of what you can afford and tell you, “Based on the numbers you gave us, you should be able to afford a loan of $X and buy a home at $X price.”
Think of pre-qualification as a loan amount you may qualify for if you apply.
It doesn’t cost you anything to get pre-qualified with Arkansas Federal Mortgage, and there is no obligation to move forward if you change your mind.
Step 2: Get pre-approved.
When you’re serious about buying a home, the next step is pre-approval. A pre-approval goes a step beyond the pre-qualification – by verifying your financial information. At this point, your lender will do a thorough investigation of your income sources, employment history, assets, credit history, and other financial commitments and debts. Verification of this information, along with a hard credit pull, can tell you what you’re actually qualified to borrow.
Having a pre-approval in hand can give you an edge over other buyers in a competitive market and can help you move quickly through the process once you’ve found your dream home. The pre-approval typically has a shelf life though, so it’s best to wait until you’re ready to start shopping.
Step 3: Finalize the Mortgage Application
Once you’ve found your dream home and the seller has accepted your offer, it’s time to finalize the mortgage application and move toward final loan approval. Once the remaining elements are received by the lender, such as property appraisal, title report, and any inspections needed, a loan underwriter reviews the information and issues a loan commitment letter or final approval. This means the loan is approved, and a closing date can be scheduled. Now is the time to celebrate and start packing!