Learn how to use a pre-qualification calculator and a pre-approval calculator to find out how much you can borrow and what kind of mortgage you qualify for.

A better way to calculate your personal budget, is to organize a spreadsheet with all your expenses. You can use something like Mint or Quickbooks or just an excel sheet. Gather all your monthly bills and liabilities. Take into strong consideration what the amount you "take home" on your pay stubs after taxes and multiply that by 40%. That's around the debt you should be holding at anytime. If all your monthly bills exceed this #, there may not be room for a mortgage. A loan officer can help crunch these #'s faster. Contact a professional ASAP and devise a plan of success. Kristina Lee, REALTOR LinkedIn

What are the benefits of using a pre-qualification vs pre-approval calculator for first-time home buyers?

If you are a first-time home buyer, you may be wondering how to start your journey towards homeownership. One of the first steps you should take is to find out how much you can afford to borrow and what kind of mortgage you qualify for. To do this, you can use two online tools: a pre-qualification calculator and a pre-approval calculator. In this article, we will explain the difference between these two calculators, how they can benefit you, and what to do next after using them.

1 Pre-qualification calculator

A pre-qualification calculator is a simple way to get an estimate of how much you can borrow based on your income, debts, and credit score. You can find many free pre-qualification calculators online, and you only need to enter some basic information to get a result. A pre-qualification calculator can help you get a sense of your budget, compare different loan options, and prepare for the next steps in the home buying process. However, a pre-qualification calculator is not a guarantee of approval, and it does not verify your information or check your credit report.

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Kristina Lee

Relocation Real Estate Specialist, DRE # 01706803
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Some tips as well to consider: - the credit report you pull on a third party platform on your own is not the same as what a bank will use. - the way you calculate your income to eventually estimate your debt to income ratio may not be the same as how a bank calculates it. - contact a professional as soon as possible and provide all clear documentation with all pages. It will save you more time this way. Kristina Lee, REALTOR LinkedIn

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2 Pre-approval calculator

A pre-approval calculator is a more accurate and reliable way to determine how much you can borrow and what kind of mortgage you qualify for. A pre-approval calculator requires you to submit an application to a lender, who will then review your income, debts, credit score, and other factors. A pre-approval calculator will give you a conditional approval letter, which shows the exact amount and terms of the loan you are eligible for. A pre-approval calculator can benefit you by showing your seriousness and credibility to sellers, agents, and builders, and by giving you an advantage in a competitive market.

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Kristina Lee

Relocation Real Estate Specialist, DRE # 01706803
(edited)
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A better way to calculate your personal budget, is to organize a spreadsheet with all your expenses. You can use something like Mint or Quickbooks or just an excel sheet. Gather all your monthly bills and liabilities. Take into strong consideration what the amount you "take home" on your pay stubs after taxes and multiply that by 40%. That's around the debt you should be holding at anytime. If all your monthly bills exceed this #, there may not be room for a mortgage. A loan officer can help crunch these #'s faster. Contact a professional ASAP and devise a plan of success. Kristina Lee, REALTOR LinkedIn

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3 How to use both calculators

You can use both a pre-qualification calculator and a pre-approval calculator to help you plan your home buying journey. A good strategy is to start with a pre-qualification calculator to get a general idea of your affordability and options, and then use a pre-approval calculator to narrow down your choices and confirm your eligibility. You can also use both calculators to compare different lenders and rates , and to see how changes in your financial situation or the market conditions affect your borrowing power.

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4 What to do after using both calculators

After using both a pre-qualification calculator and a pre-approval calculator, you will have a clearer picture of how much you can afford and what kind of mortgage you qualify for. The next steps are to find a trusted real estate agent who can guide you through the home buying process, to search for homes that match your criteria and budget, and to make an offer on the home of your dreams. Remember that a pre-approval letter is not a final approval, and that you still need to complete the underwriting and closing process before you can get the keys to your new home.

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Karen Tucker

Broker/Salesperson at Berkshire Hathaway HomeServices Alliance RealEstateEstate
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Actually, the best and the only way to guarantee you are qualified is to go a step beyond the pre-approval letter and complete underwriting. I have lenders who can do this in advance so that you are ready to purchase without any contingency of loan approval, you are as good as cash. I would still start with the above so you know where you are finacially. I have lenders ready to help you get the best pre-approval possible!

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5 Tips and best practices

If you want to make the most of a pre-qualification calculator and a pre-approval calculator, use them as early as possible in your home buying journey. This will give you enough time to adjust your finances and expectations. Additionally, use calculators from multiple lenders so that you can compare different offers and negotiate the best deal for your situation. Keep in mind that these calculators should be used as guidelines, not guarantees, and you should be prepared for possible changes or challenges along the way. Furthermore, update both calculators regularly, especially if there are changes to your income, debts, credit score, or market conditions. Finally, keep your pre-approval letter valid by following the lender's instructions and providing any additional documents or information they request.

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6 Common questions and answers

Using a pre-qualification calculator and a pre-approval calculator can be a helpful part of your home buying process. A pre-qualification calculator usually takes only a few minutes to use, while a pre-approval calculator can take anywhere from a few hours to a few days, depending on the lender and the complexity of your application. Pre-approval letters are typically valid for 60 to 90 days, but this may vary depending on the lender and market conditions. Using both calculators will not affect your credit score if you use the pre-qualification calculator; however, the pre-approval calculator will pull your credit report and create a hard inquiry on your credit history. This impact is usually minimal and temporary, but it can be beneficial to have a pre-approval letter.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Karen Tucker

Broker/Salesperson at Berkshire Hathaway HomeServices Alliance RealEstateEstate
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If you are thinking it is time to purchase your first home, let's chat about what is needed to be ready for that purchase and all costs involved. Remember a pre-approval is essential before you even begin to look at homes and should be your one of your first steps in the process.

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What are the benefits of using a pre-qualification vs pre-approval calculator for first-time home buyers?

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1 Pre-qualification calculator

2 Pre-approval calculator

3 How to use both calculators

4 What to do after using both calculators

5 Tips and best practices

6 Common questions and answers

7 Here’s what else to consider

Working with First-Time Home Buyers

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