Before you go out looking at Atlanta homes to buy you better think about getting a loan. A lost has changed in teh last few years, and it is critical that before you see home, you better first see if you can even get one. When you make your very first call to a mortgage planner also known as a loan officer, you merely supply them with your overall financial information which would be your income, assets, and debts. This can be done with a quick phone call and there's no cost involved. This known as "Pre-Qualified." Note that the loan officer has not actually pulled up your credit to verify just yet. The reason you'd call a mortgage planner is that you want to discuss your ability to purchase, what your monthly payments would be and so forth but it is not a thorough look at this point. A rule of thumb on pre-qualifying used to be multiply 2.5 times your yearly income, then minus your monthly debt, and that's what you can afford. Now you know why pre-qualification has no real power.
Pre-Approved is different! When you get pre-approved, you are supplying the loan officer with more detailed picture of your financial ability to purchase. You fill out a mortgage application for which you will pay a fee, then you must additionally get all documentation regarding your bank information, last two years income tax filings, your credit will be checked with credit reporting companies among other supporting documents the mortgage broker will need. Now you have a sharper idea of the interest rate, monthly payments, and you'll get a conditional commitment in writing which permits you to look for a home at or below a certain price level. Now as a buyer, you have some power as the sellers will recognize you are one step closer to loan approval. In this market especially, the sellers will know you are a serious buyer and the "buyer" who put an offer in on the house you're interested in purchasing but did not attach a letter from a bank. If you are looking at foreclosures, the bank or corporate owners won't even look at an offer without a pre-approval letter attached.
Once you place your offer and it is accepted, during your due diligence period, an appraisal will be ordered and that property must appraise at the contract price or above sales price. Then the underwriter of your mortgage will once again check your credit to be certain nothing else has changed and they may even ask the appraiser for evaluation of possible problems such as structural issues. Once the bank will commit to lend, you're good to go. Your loan's been approved! Happiness and good health in your new home!
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