The intense competition that homebuyers in metro Phoenix experienced last year has carried over into 2022 and could continue indefinitely. With limited inventory, there are many more buyers in the market than sellers. Savvy buyers will arm themselves with all the advantages they can muster, including a pre-qualification from a lender. It really should be your first step to buying a new home.
In fact, in Arizona a pre-qualification is required to be presented with any offer to purchase. So before you start searching real estate websites and asking your Realtor® to show you some homes, make your first stop a meeting with a lender.
Working with a lender will help you understand how much you can qualify to borrow. Once that’s established, your lender will issue an official document that states the maximum amount they’re willing to lend you. This is the pre-qualification.
Getting Started with Pre-Qualification
You’ll start by filling out a loan application. Your lender will probably ask you to provide certain documents such as your W-2, bank statements, credit report, & tax returns. These will help your lender evaluate your ability to make your mortgage payment. Your lender will use the 4 C’s to make their evaluation.*
Capacity: Your ability to take on a monthly payment.
Capital: Your available cash or other assets that you could sell quickly for cash.
Credit: Your history of paying bills on time.
Collateral: The type and value of the home you’ll be buying.
After evaluating all this information, your lender will provide you with the pre-qualification form. Now you have the knowledge you need to know how much home you can afford and your Realtor® will be able to help you search for homes in your price range.
Things to Keep in Mind
- Your pre-qualification will let you know the maximum amount you’re qualified to borrow, but you should only borrow an amount that you feel comfortable with.
- Pre-qualifications expire, and the typical time frame is 60-90 days.
- Although you received a pre-qualification from one lender, you’re not required to use that same lender for your loan.
- It’s wise to talk to several lenders to learn who has the best loan programs and rates.
Contact The Donnelly Group!
If you have any questions about pre-qualification, or taking the first steps to buy a home in metro Phoenix, please contact the Donnelly Group at 480-792-9700 or by email.