Q & A: Prequalifying and Preapproval

Click a question to jump right to the answer:

  1. How do you qualify as a first-time buyer?
  2. What can I afford?
  3. What do I do if I get turned down for a loan?
  4. What is the first step in obtaining a home loan?

How do you qualify as a first-time buyer?

A first-time homebuyers is usually defined as someone who has not owned any piece of real estate (personal, investment or vacation) during the past three years. To qualify as a first-time buyer, lenders will research your past financial history to verify no real estate has been owned.

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What can I afford?

Before starting your home search, you should review your finances and determine how much money you have available for a down payment and closing fees, as well as review your monthly budget to determine how much you can spend monthly on mortgage, taxes, insurance, utilities, and maintenance fees. Meet with a lender to see what type of loan amount you would be pre-approved for, and confirm with a financial advisor if necessary to ensure you are staying within your financial limitations.

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What do I do if I get turned down for a loan?

Ask the lender for a full explanation on why you have been turned down for your loan. Then, depending on the reasoning, take immediate steps to rectify those factors. For example, if your credit score is too low, they may deem you too high of a risk for a loan. But, if you meet with a financial advisor to discuss your options, they will be able to get you on a path to a stronger score.

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What is the first step in obtaining a home loan?

The first step in obtaining a home loan is to get pre-qualified. It is recommended that buyers get pre-qualified prior to starting their home search to ensure they will qualify for a home within their desired price range. After being pre-qualified, buyers can shop around for the best loan rate by asking lenders for a good faith estimate, which is a lender’s estimation of the loan rate and fees.

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