Financing

Pre-Qualification and Pre-Approval 

Many buyers apply for a loan and obtain approval before they find the home they want to buy. Why?
Pre-qualifying will help you in the following ways: View Financing terms glossary.

1. Generally, interest rates are locked in for a set period of time. You will know in advance
exactly what your payments will be on offers you choose to make.
2. You won’t waste time considering homes you cannot afford.

Pre-approval will help you in the following ways:

1. A seller may choose to make concessions if they know that your financing is secured. You
   are like a cash buyer, and this may make your offer more competitive.
2. You can select the best loan package without being under pressure.

HOW MUCH CAN YOU AFFORD?
There are three key factors to consider: View Mortgage Calculator

1. The down payment
2. Your ability to qualify for a mortgage
3. The closing costs associated with your transaction.

DOWN PAYMENT REQUIREMENTS
Many loans today require a down payment of between 3.5% and 5.0% depending on the type and
terms of the loan. There are also loans that require no down payment. If you are able to come up
with a 20-25% down payment, you may be eligible to take advantage of special fast-track programs
and possibly eliminate mortgage insurance.

CLOSING COSTS
You will be required to pay fees for loan processing and other closing costs. These fees must
be paid in full at the final settlement, unless you are able to include them in your financing.

QUALIFYING FOR THE MORTGAGE
Most lenders require that your monthly payment range between 25-28% of your gross monthly
income. Your mortgage payment to the lender includes the following items:

• The principal on the loan (P)
• The interest on the loan (I)
• Property taxes (T)
• The homeowner’s insurance (I).

Your total monthly PITI and all debts (from installments to revolving charge accounts) should range
between 33-38% of your gross monthly income. These key factors determine your ability to secure a
home loan: Credit Report, Assets, Income, and Property Value.

Start your Pre-Qualification and Pre-Approval here.