Can I apply for a mortgage before finding a house?
Is it possible to have a mortgage ready for when I find a house, or do I need to find a house first?
- loanmasteroneLv 75 years agoFavorite Answer
Getting pre-approved for a mortgage loan is recommended before you purchase a house or even go looking for a house.
Most real estate agents would refer you to a mortgage lender they know and have you prre-approved for a mortgage before they would even take you to look at a potential house for you to purchase.
Buying a house is a step by step process, this is the first step you should take in order to purchase a house. The rest of the steps will fall in place, no matter the type of property you are purchasing.
In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage broker, you can find one in your local telephone book.
Make sure this mortgage broker or mortgage banker is able to do government loans such as USDA, FHA and VA loans if you qualify for one. With a VA mortgage loan you are not required to have a down payment, this will save you on closing cost.
He will fill out this application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate.
The amount of your monthly debt payments you are required to pay as per your credit report and the amount of your monthly income earned would be used in a formula to determine what is called a debt ratio. This debt ratio would determine the amount a mortgage lender would allow you to borrow to purchase a house. This debt ration should normally not exceed 39%.
When you speak with the mortgage broker you will need the following documents to complete the loan application, there will be others, but this will get you started.
#1 One month of pay stubs for each person that will be on the mortgage.
#2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment.
#3 Two years of federal income tax along with the W-2 that match.
Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased.
Make sure, before you get your pre-approval letter, you and your mortgage broker go over all your options, as to all the mortgage programs you qualify for, the interest rate, monthly payments. This will allow you to make an intelligent decision.
Once you have your pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.
If you are getting a FHA, fixed rate, two loans to eliminate PMI like an 80/20 or one loan, if you are qualified for and approved for a 100% loan.
You should select the loan that best suit your financial situation at the time. That could be an adjustable rate loan. It could be a fixed rate loan for 5 or 10 years and then adjust. Some adjustable rate mortgages only adjust once.
What might be good for one person might not be good for you, in other words just because your friends and all your real estate buddies are telling you about the great fixed rate they got, your financial situation might call for something else.
So select the best option for you and your financial situation.
You should also get a Good Faith Estimate (GFE) which will indicate the cost you will have to pay for getting this loan. It will also indicate the amount of your down payment.
Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign. Your mortgage broker will now order an appraisal to show proof of the property value.
The mortgage broker might ask for additional information or documentation, don't get all up tight this is normal, just supply the information or find the documents needed.
After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home.
Before signing any loan docs make sure they say exactly what you and your mortgage broker went over when you decided on what mortgage program was best for you.
I hope this has been of some benefit to you, good luck
- MuttLv 75 years ago
You can get pre-approved. In fact, it's probably a good idea to get an idea of how much you can actually get, so you know what houses to look at. If you get pre-approved for up to $150,000, there's no sense in looking at houses that cost more than that.
This isn't an actual mortgage, as that is a financial interest in the home you buy. So once you find the home you want, then you make an offer and start the actual mortgage application once the offer is approved by both parties (they can counter offer, and you can counter their counter offer if you want. It goes back and forth until there is an offer both sides can agree on).
- SandyLv 75 years ago
No. The mortgage is based on the amount of money you need for a specific house.
What you should do first is get pre-approved. That will tell you how much money lenders will be comfortable giving you.
There's an article here that you might find helpful -- http://www.investopedia.com/financial-edge/0411/5-...
- 5 years ago
You can get preapproved. The mortgage is based on what you need to borrow, and you don;'t now that until you find the house.
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- Donald BLv 75 years ago
You can get pre approved for a mortgage. If it is your first house it is a good idea to get pre approval so you will know exactly how much you can borrow
- Beverly SLv 75 years ago
You can get pre-approved up to a certain amount before finding the house. However, for final approval there has to be an appraisal, title search, & contract. Do get pre-approved on credit & income though!Source(s): Mortgage lender 28 years.
- TavyLv 75 years ago
Here in the UK we would contact a bank and go through the process of much they will lend you. Then you look for a house.
Obviously you need to know before you start house hunting.