Deciding how much house you can afford

Before you start house hunting, you need to determine how much house you can afford, which will entail getting pre-approved for a home loan. A real estate agent can help you find a mortgage broker to begin the process. While getting pre-approved is a more in-depth process, a pre-approval letter lets both real estate agents and sellers know that you’re a serious shopper who means business.

What do I do to get pre-approved?
Getting pre-approved requires that the lender review your finances, confirming pay stubs, tax records, credit accounts, bank statements and sometimes more. The pre-approval amount will not only be a reliable estimate of what you can afford, but your pre-approval also indicates that a lender is willing to do business with you, pending the purchase price, market appraisal and the underwriting process.

You can also get pre-qualified for a loan, which means that a lender has taken some information from you, and made a tentative decision without necessarily verifying any of the information. Prequalification provides you with a quick estimate of the amount you can afford, but is not considered as reliable as pre-approval.

What should I ask when shopping for a lender?
Your real estate agent should have a mortgage broker they are willing to put you in contact with — this lender will be someone they have done business with in the past, and feel comfortable recommending. However, if you decide to do a little comparison shopping and look for a lender on your own, here are a few important questions to ask.

  • What loan programs do you offer and which one do you think is best for me?
  • How long will the loan approval process take?
  • What line items of the loan agreement  —  if any  —  are negotiable?
  • What is your policy for locking in interest rates, and will you honor a lower rate if it declines during the lock-in period?
  • Are there fees for prepaying on my loan?
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     Suite 600

     Mineola, NY 11501

     516 462-8000

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