Many first-time homebuyers in New Jersey are not sure where to start when it comes to buying a home. Many think the best place to start is by going to open houses, or selecting a real estate agent and placing offers on a home. However, for those that need financing, the crucial first step in buying a home is obtaining a mortgage pre-approval.
A mortgage pre-approval means that a lender has reviewed your personal finances and determined how much money you are allowed to borrow. The factors that impact your pre-approval include your income, debt, assets, employment status, and credit history. Usually the higher income you have, the more you will be pre-approved for (assuming you do not have serious long-term debt that takes up a large portion of your earnings).
Property taxes are another factor that can effect the pre-approval. However, this is property specific. Your lender should be able to provide you with a rough estimate on the property taxes you can expect to pay based on the towns you are interested in living in.
Obtaining a pre-approval will provide you with clarity and direction in the home buying process. You will know what you can afford and what is out of your price range. With this information you can focus on homes that will be affordable to your situation, while providing you with the features that you need. The pre-approval will also give you more confidence in your ability to secure a loan, and show sellers you are a serious buyer when you submit it with your offer.
When obtaining a pre-approval, make sure to shop around for the best rates. You will also want to go with a reputable lender. A reputable lender should verify your income and expenses, as well as find out about your personal financial situation before issuing the OK.
For more questions about the NJ home buying process, contact Avallon Real Estate Group here, or fill out the form below: