The first step in buying a home is to obtain a formal pre-approval from a licensed, trustworthy Mortgage Lender. Your Mortgage Advisor will meet with you – usually by phone or Zoom meeting – to discuss your current financial situation and future goals. During this phase, the Mortgage Advisor will help you complete a mortgage application and collect income and asset documentation which will be used to verify the information for the pre-approval and later on, in underwriting. Due to the competitive nature of Real Estate and because home buyers often tour homes on the weekend, it’s important to choose a Mortgage Advisor who will be available when you are – including evenings and weekends so they can provide custom pre-approval letters over the weekend, and support the home buying process.
After completing your application and providing supporting documents, your home loan advisor will provide detailed information on your maximum purchase price along with the monthly payment details. It’s important to remember that the monthly payment is usually made up of principal and interest (i.e. the loan payment) along with other items such as property taxes, homeowner’s (hazard) insurance, mortgage insurance (under certain situations) and home owners association dues where applicable.
Ideally, you’ll want to target a range much lower than your maximum purchase price for two reasons. First, in this competitive real estate market, it’s common to bid over asking price. If you target a price under your max, you’ll have room to compete with higher bids. Secondly, it’s important to be comfortable with your payment. Aiming at the max end of your budget will usually result in securing a payment that is too high and may lead to added stress for a homeowner. Your Mortgage Advisor can advise you based on factors such as expected income changes, financial goals including a target retirement age and more.
