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Step #1 Obtain Pre-Approval
The first and most important step in the home buying process is obtaining a pre-approval from an area lender. You will want to meet with a lender or mortgage consultant, as he/she carries the expertise, to have him or her walk through the pre-approval process with you.
You will need to provide documentation, as requested by the mortgage consultant, to process your paperwork. Once the information has been gathered and processed, you should receive a pre-approval letter within 24-48 hours. This letter will indicate what price range you should be shopping in when browsing for your new home. If you are working with a Buyer's agent, you will want to provide a copy of this letter to him/her.
Often times, there is confusion between a pre-approval and a pre-qualification. A pre-qualification can usually be given over the telephone, without providing employment verification or tax forms. Although this type of approval may give you an indication as to how much you may be able to afford, it does not consider all factors as they relate to your specific situation. The true measure of how much you can afford is determined through the pre-approval process, and also through careful consideration of your own spending habits. Be sure to discuss this with your mortgage consultant so you are clear as to what type of approval you are receiving.