What does it mean if you are pre-approved?

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A pre-approval is your first step to becoming a home owner.  Whether you contact a realtor first, you will need a pre-approval to find out how much you can spend on a house.  A mortgage pre-approval will accomplish several things.  First off you will find out how much you qualify for.  You will be able to secure a rate for up to 120 days.  Working with me you will be well on your way to getting a house because we will also discuss what the lender will need to fund the mortgage.

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How long does it take to get pre-approved?

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In a matter of minutes, I can determine how much you qualify for and whether your credit allows you to qualify also. With my experience, I can quickly get through the numbers and offer you advice.  Once I have pulled your credit I will have a good idea as to whether you qualify.  Essentially what we will have accomplished at this point is what I call getting pre-qualified.  From there it takes usually 1 day to get a pre-approval, sometimes longer in times when the lenders are busy.

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If I get a pre-approval am I obligated to that lender?

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No, you are not obligated to continue with an approval from that lender.  That said, based on our discussions I will have selected a lender that best meets your needs based on interest rates, pre-payment privileges, restrictions and so on.  I want to make sure that the mortgage you get in to will suit you for the entire term.

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How much does a new house cost?

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When contemplating purchasing a home and getting a pre-approval you should be taking in to consideration all the costs associated with house purchases when you obtain a pre-approval.  A pre-approval will only tell you if you qualify.  Whether you can afford it is another matter.  Factors you will need to be taking in to consideration when getting a pre-approval is;

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Mortgage Payment – This is your principal and interest.  If you are putting less than 20% down, then you will want your mortgage payment to include mortgage default insurance.  The interest rate will also change the payment so you will want to adjust that to come up with a payment you can afford.

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Property Taxes – Property taxes have to added on top of your mortgage payment.  When there is a lender involved most often there are 2 ways that property taxes are paid.  You can pay the lender and they will pay the property tax or you can usually pay them directly to the municipality in monthly installments.  No matter the method they increase your monthly expenses.

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Maintenance – unlike renting, if you have to fix anything you have to pay for repairs out of your pocket.  It is important when you own a house to set a little aside for future repairs. 

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House Insurance – You will have to factor in the cost of house insurance.  It is recommended when you are renting to get renters content insurance.  When you purchase a house it is required to have replacement insurance.  This way if something happens to the house then the lender that lent the money to you is not out.

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Services – Lastly, but not least is your services.  You will need to pay for heat, electricity and sewage.  These services can also add up.  The bigger the house the more expensive these can cost.  It is also important to take in to consideration what your new house might have which could save you money or cost you more.  For example having a high efficiency furnace can save you money.  Having old toilets which use a lot of water can cost you money.  So when you are looking at potential new houses you will want to take these items in to consideration as well.