If visions of your dream home dance through your thoughts, your mind has also likely wandered to the question: how much home can I afford?

Every buyer considers this. The answer is never as simple as running the numbers through an online mortgage calculator. There’s a lot more to it than that. But please don’t let this overwhelm you! It actually means there’s more opportunity to land in the home of your dreams than you might have realized. A professional real estate agent will clear up the fog of questions that arrive when a buyer begins considering how much they should spend on a house, how much mortgage they qualify for, and what steps they should take in the process of home buying. It all becomes fun when you have the right Realtor by your side.

In initial conversations with Kathryn Harbour Real Estate clients, we go over exactly what they need to know in order to conduct a successful home search. When a buyer becomes aware of what factors determine a home’s selling price, they have the power to get that home for the best possible price, rather than feel intimidated by the price they see in the listing. We always remind buyers that a listing price is a starting point, not an endpoint. The tips below will help to get you started. It is possible to find an affordable dream house in Acworth, Marietta, Kennesaw, and throughout Cobb County, Georgia and surrounding areas!

Mortgage Pre-Approval Over Mortgage Pre-Qualification

Mortgage pre-qualification is not the same as pre-approval, so it’s best to understand these terms. Pre-qualification is an estimate, which is good to know, but not as solid as pre-approval. Pre-approval is more comprehensive, and therefore more valuable when you embark on your home search. With pre-approval, the lender has already verified the buyer’s documentation and credit and approved a specific loan amount for the duration of normally 60 to 90 days. It’s important to understand: this pre-approved loan is not completely guaranteed. It will be contingent upon the property’s appraisal.

In order to receive pre-approval, some essential information is needed when meeting with a potential lender.

• • Proof of income: the past 2 years of W-2 statements; recent paystubs; proof of other income, such as alimony.

• • Proof of assets: to show that you possess the funds for a down payment, you’ll need to bring a current bank statement that shows the correct amount of money.

• • Employment verification: you should bring recent paystubs, though expect lenders to call your employer for confirmation. So you might want to alert your employer to expect such a call around the time you are going through the pre-approval process.

• • Identity documentation: a driver’s license, social security number, and your verified signature to approve the lender being able to pull your credit report.

• • Credit: a score of 740 or above is the goal for landing the best possible loan with the lowest down payment. These days, however, reasonable loans are being made to people with much lower credit scores, including the low 600s, and sometimes even the 500s. There are so many types of loans available that no one should feel left out of the home buying process. And if you want to find ways to improve your credit score, a good lender can suggest ways to do that.

Starting your home search with your pre-approval letter in hand proves to the seller that you take this seriously and won’t potentially waste their time. If the seller is motivated, they may be more inclined to consider a lower offer with contingencies, such as a buyer with a home to sell.

If you do get serious about a home, be sure to hire a professional inspector. Their findings could give you leverage toward a better deal. An additional note of interest: rest assured that the seller cannot sell the home while you are going through the inspection process and that you can walk away if you don’t like what you find.

Select the Best Mortgage Lender, Not Just The Best Rate

No loan should be selected just because it offers the best mortgage rate. Working with the best mortgage lender is also important. The lenders you’ll want to consider working with won’t simply sell you a loan, they’ll work with you to determine how much mortgage you can afford based on your salary and debt. They’ll also help determine your down payment, which can vary depending on the type of loan you get. You may not have realized that an FHA loan requires a down payment of as little as 3.5%, which can be less than the down payment amount required for a conventional loan. If you are a first-time homebuyer, and/or plan to live in the house full-time, an FHA Loan may be just right for you.

Other lower down payment loans may be available to you, such as a government-guaranteed VA loan, from the Department of Veteran Affairs, or a single-family housing guaranteed loan from the USDA. All possible loan types should be reviewed when you begin asking: “how much home loan do I qualify for?” The best mortgage lender will know about all types of loans, not just conventional loans, and may be able to secure a rate lower than the “best mortgage rate” offered by other lenders. So put down your mortgage payment calculator and instead shop around for a good lender, as well as your ideal loan.

Through our decades of experience as professional Realtors, we’ve advised our clients on all types of loans and led them to the size, location and, ultimately, price of the home that they can afford. Be sure to work with a qualified Realtor who is able to get you into just the right house that you can afford.