Pre-Qualifying For A Loan On Hilton Head
Before you even start looking for a home, it's a good idea to pre-qualify for a loan. Visit with a lender – a mortgage company, savings and loan bank, or credit union. Ask them to determine the maximum amount you qualify for based on your specific financial information regarding the types of loans available.
The pre-qualifying interview should be free, and at some institutions can be done over the telephone. Remember to bring tax returns, salary stubs, and other financial data to the pre-qualifying interview. You'll want to find out how much mortgage debt you can carry under the most commonly available mortgages. Because the 30-year fixed-rate mortgage is still the benchmark against which other loans can be compared, find out what size conventional 30-year loan you can qualify for under the guidelines issued by secondary-market mortgage buyers such as Fannie Mae or Freddie Mac (these are known as 'conforming' loans).
Also get information on one- and three-year adjustable-rate mortgages, as well as a 15-year fixed-rate loan. Knowing what you can afford to buy with these four mortgage types is a useful starting point. If you're planning on getting an FHA-insured or VA-guaranteed mortgage, you may get a bigger loan. However, keep in mind that sellers in a hot market are usually not eager to do business with buyers using this type of financing due to the extra paperwork and appraisal delays these loans often entail. So it's a good idea to see whether you can manage a home purchase without resorting to an FHA or VA mortgage.
Finally, remember that you are not obligated to use the lender who pre-qualifies you. When you're ready to borrow, compare the rates and mortgage options available from several lenders. Because each inquiry on your credit report will slightly reduce your credit score, be sure to limit the number of inquiries.
If you are confident with the lender you choose, it is a good idea to make a full loan application and start the loan process. This will make you a much stronger purchaser.