Pre-Qualification

Before you start your Bennington area home search, it’s wise to find out if you are able to obtain a mortgage and for how much. This can be determined through the process of pre-qualification, usually over the phone or internet with a lender. The lender will ask you questions about your financial situation and use this information to provide an estimate for the mortgage that you might receive. This process does not guarantee that your mortgage application will be accepted, but it does help you narrow your search to homes you can afford.

Pre-Approval

Pre-approval is a more formal process than pre-qualification and what your Realtor® is looking for when writing up your offer. You will provide the same information that will be submitted with your formal loan application including employment information, copies of pay stubs, recent tax returns and bank statements. The lender will also obtain a copy of your credit report.

Pre-approval guarantees your loan, but it is not a mortgage contract.  Pre-approval may allow you to lock in an interest rate but you can’t obtain a mortgage until you choose a property and the lender performs an appraisal. When you make a formal application for the loan, certain facts will have to be re-checked.

It is important not to make any major changes to your employment or credit during the home buying process. Purchasing a new car or furniture for example may alter your ability to obtain a mortgage. It is also important not to open or close any credit accounts without consulting with your lender to see if this will have an impact on your credit score.

Keep your job. Having been in a job for less than two years may mean you have to pay a higher interest rate.

Down Payment

The down payment is the difference between the purchase price of the home and the loan amount. This is the amount that you are paying towards the purchase price. Generally, the larger the down-payment, the lower the interest rate you can expect.

Money for the down payment can come from a variety of sources, including your personal savings, the sale or refinance of another home, or a gift or loan from family members. Your lender will tell you the latest regulations regarding down payments.

If you are going to rely on gifts from family members for your down payment, it is wise to have those funds transferred into your name by your mortgage commitment date in order to ensure that the funds will be available.