Before wasting time looking for Ahwatukee homes outside your affordability range, you must first determine how much home you can afford. A prudent homebuyer will set a monthly payment budget that will give he or she stress- free financial flexibility. An Ahwatukee, Arizona mortgage lender will also determine how much it believes the buyer can afford.
When you apply for a home mortgage, the lender will consider your credit history, income, assets, debts; employment along with other factors to determine your creditworthiness. If your loan request is approved, they will set a maximum loan amount that the lender determines you can afford. And, the better your credit score…the better the interest rate they will give you which positively impacts your monthly payment.
A Home Loan PreQualification
If you want a quick-gauge on what a lender could be willing to loan, you can request a “pre qualification” assessment. Essentially a prequalification is a “test-run” preceding a formal mortgage loan application approval. Based upon information you provide to the lender, it will determine the likelihood of an actual approval and approximate mortgage limit affordability.
A prequalification to purchase a home is not binding upon your lender since it is only based upon information provided by you that has not been verified. You as the buyer, are as well not obligated to use that particular lender for your home loan The prequalification process is generally quick and free-of-charge.
A Mortgage Loan Pre Approval
Based upon a formal mortgage loan application, the lender will initiate the formal process of verifying your credit, income, assets, debts, the formal process of verifying your credit, income, assets, debts, employment and credit score to determine loan approval or rejection. If approved, your lender will issue a letter acknowledging pre approval with a specified mortgage ceiling. This preapproval is binding on the lender for a specified period of time. There is usually a modest fee applied that may be refunded at close of escrow.
A “prequalification” will give you a very close approximation of mortgage affordability should your actual mortgage loan application be ultimately approved. The prequalification sends the message to the seller that you could afford to purchase the home if your application is successful.
A “preapproval” gives both the buyer and the seller greater confidence of a successful purchase transaction. As the buyer, a preapproval gives you a greater negotiating advantage over a “non-approved” buyer. Often a seller will accept a smaller price offer when the buyer has been preapproved for the purchase price.