True, but you missed one. An important first step in the home search process is getting pre-approved for a mortgage.
Pre-approval is a commitment by a lender to make a mortgage loan to a borrower, before a property is identified. Unlike pre-qualification – a more informal review of your finances and estimate of your borrowing power – pre-approval requires extensive documentation and a credit check.
While navigating a sea of paperwork upfront might take the fun of home buying, pre-approval is essential to determine the amount of loan you qualify for. There’s nothing more distressing than finding the home of your dreams, getting emotionally attached, and then determining that you cannot finance it.
With a clear understanding of your financial situation, you can focus on homes in that price range. You’ll enjoy the home-search process since you’ve removed unwelcome surprises and already tamed the paper tiger.