"Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it?  Luke 14:28

How much can I afford?  With many sites, it is easy to plug in numbers and get a broad idea of a comfortable mortgage amount.  But it is important to understand this is merely a rough estimate and does not consider all the factors that an experience mortgage loan professional could uncover.  Serious home buyers need to analyze specific information and seek the advice of a loan professional.  One way to get a general idea is to ask for a pre approval ar actually prequalify for your loan.

Pre-Qualify vs. Pre-Approval can be confusing when entering the home buying process.  Pre-qualifying gives you, the potential homebuyer the opportunity to take a general look at your finances from a mortgage perspective.  It is not a guarantee of approval, or an actual approval.  I helps you learn approximately how much home you can afford to buy based on your credit, income, and assets. 

Pre-Qualifying is one of the best things you can do for yourself if you are looking to buy a new home. Getting pre-qualified tells your real estate agent and potential sellers that you are seriously looking for a home to purchase.     Talking to a loan professional can help you know what you and your family can comfortably afford, guide you if you have been through a bankruptcy or foreclosure, or help you in reestablishing your credit.

Once you know what you can afford you will know the sales price range of the homes you can look at. This step takes about 10-15 minutes depending on how much you have to say about your situation. Once you are pre qualified you will know:

• Your approximate monthly house payment
  
   
• Price range of the home you can purchase
  
   
• Amount for a down payment or if you qualify for 100% financing.
  
   
• What are your approximate closing costs
  
   
• What kind of loan program that might be good for you based on your wants, needs, and desires

Getting pre-approved takes getting pre-qualified a little further. In this step you will actually give your loan officer your pay stubs, W-2's, and asset statements like your bank statements or retirement account statements. If your loan officer has not pulled your credit they will during this step. You may even be asked to sign a full loan application and any additional paperwork necessary to get your file underwritten.

During the underwriting process, your loan officer will verify all of the information that you gave them in the beginning. They will then submit your personal financial and credit information to underwriting to determine if you qualify for the mortgage or not. At this point, unless you have a property picked out, the loan officer will most likely make up an address and a sales price that matches either your payment comfort level or what they think that you'll qualify for.

An underwriter will look at your loan and credit paperwork and give you a thumbs up, or a thumbs down about being approved. More often than not, no matter whether you get an approval or a denial you will get information or recommendations - we in the business call these either conditions or stipulations - for what is needed to get you a mortgage. Your loan officer should also tell you what you need to do to qualify.