The first step to buying a new home is to determine how much you can afford to spend. 

A solid credit rating and a mortgage pre-approval are both beneficial when shopping for a home. Pre-approval strengthens a buyer’s position to make an offer when he or she finds a suitable property. Sellers are generally more willing to accept offers from pre-approved buyers, because pre-approval shows that the buyer has sufficient resources available either to purchase a property or obtain a mortgage loan.

Typically buyers borrow money to purchase a home; therefore, lenders closely examine credit scores, which serve as a measure that lenders use to determine the likelihood of an individual paying back the borrowed money.

Being eligible for a loan and being able to afford the property are not necessarily the same. Regardless of the size of a loan a lender offers, purchasers should not buy more home than they can afford.

Higher credit scores translate into the ability to borrow more money at lower interest rates. To make sure that borrowers get the best possible loan deal, they must first check their credit scores by ordering their credit reports. Such reports are free; however, they list creditors but do not list numerical scores, often referred to as FICO scores. Clients should know their credit scores long before the time comes for them to pursue a mortgage loan. Knowing one’s credit score is important because it is often necessary to take steps to improve credit ratings before applying for a mortgage.

If your score is lower that you would prefer, it may be necessary to spend six to nine months to make all loan payments on time, pay down or pay off credit card balances, close credit accounts that are not in use, and refrain from opening new cards or incurring additional debt. Good credit is not built overnight. 

To get a good idea of how much a potential buyer can borrow, a lender can pre-qualify the buyer for a mortgage loan. The specialists at VIP Credit Counseling and Repair recommend that clients obtain loan pre-approval. Pre-approval verifies the borrower’s:

• Credit status and credit rating, both past and current
• Financial and employment information
• Ability to qualify for and pay back a mortgage loan

To begin the pre-qualification process, the buyer meets with a VIP Credit Counseling and Repair lender and provides information about assets, income, and liabilities. Based on that information, the lender then provides an estimate of how much money the borrower needs to borrow. Knowing this amount beforehand allows the buyer to determine the price range of homes he or she can afford before beginning the search for a home.

The pre-qualification process is informal. VIP Credit Counseling and Repair does not verify the information provided, does not charge the buyer a fee, and does not formally agree to approve a mortgage for the amount the buyer is pre-qualified to borrow.

Once a VIP Credit Counseling and Repair lender receives a buyer’s pre-approval, the buyer is ready to shop the housing market. Home shopping oftentimes involves many months of effort. Potential homebuyers should take their time, tour many properties, and refrain from spending money until they are sure that they have indeed found the best home at the best price.    

A careful look at the borrower’s finances, a thorough review of the amount he or she wishes to spend, and consideration of the type of mortgage loan that he or she will be comfortable with should all be part of the pre-qualification and pre-approval process.

In addition to pre-approval services, VIP Credit Counseling and Repair realtors also assist clients in searching for the home of their dreams.

With careful planning and assistance from VIP Credit Counseling and Repair advisors, a buyer’s search for the home of his or her dreams can be a rewarding and financially responsible experience.

If your score is lower that you would prefer, it may be necessary to spend six to nine months to make all loan payments on time, pay down or pay off credit card balances, close credit accounts that are not in use, and refrain from opening new cards or incurring additional debt. Good credit is not built overnight.