Meeting with a mortgage officer should be the first step of a home buying process. Obtaining a thorough pre-approval will clearly determine a goal purchase price, necessary down payment and monthly payments. Some buyers qualify for a conventional loan (5% – 20%) down payment, some can only qualify for an FHA loan (3.5% down payment). Some buyers qualify for VA financing and sometimes a rehabilitation loan is necessary if a buyer wants to purchase a property that needs extensive work.
Don’t confuse pre-approval with prequalification. Pre-qualifications are done online with few clicks of a button by the buyer. Pre-approval on the other hand is a conditional commitment by the bank to lend money for a home purchase.
Lastly, the market is moving at a very fast pace. Many home sellers find themselves in a multiple offer situation and will not consider an offer that is not accompanied by a pre-approval. You could miss the house of your dreams because your paperwork is not in order.
Quick note – if you are denied a loan by one lender, talk with your realtor – banks are very strict with their financing, but mortgage lenders that work with multiple providers are able to accommodate struggling buyers. Your realtor will refer you to several mortgage officers.