You've found the perfect neighborhood, started browsing homes online, and maybe even pictured where your furniture will go. But before you fall in love with that dream home in Folsom, there's one important step you shouldn't skip: getting preapproved for your mortgage.
As a mortgage broker with Barrett Financial Group LLC, I've been helping people navigate the mortgage process since 2003. And if there's one thing I've learned, it's that a little preparation upfront can save a whole lot of frustration later.
Whether you're looking at a home in Broadstone, Empire Ranch, Folsom Ranch, or another part of Folsom, here's what I recommend knowing before you start seriously shopping.
1. Know What You Can Afford, Not Just What You Qualify For
One of the biggest mistakes homebuyers make is assuming that the maximum loan amount they're approved for is the amount they should spend.
Just because a lender says you qualify for a certain amount doesn't mean you'll be comfortable making that payment every month.
Your mortgage payment may include principal, interest, property taxes, homeowners insurance, mortgage insurance, and possibly HOA dues.
I always encourage my clients to think about their complete financial picture. What monthly payment allows you to enjoy your home without feeling like you need to survive on ramen noodles for the next 30 years?
The right mortgage isn't necessarily the biggest mortgage you can get. It's the one that fits your life.
2. Your Credit Score Matters, but It Doesn't Have to Be Perfect
Many buyers assume they need excellent credit to qualify for a mortgage. That's simply not true.
Different loan programs have different credit requirements. FHA, conventional, VA, and other mortgage options may offer opportunities depending on your circumstances.
Your credit score can affect your interest rate, loan options, and mortgage insurance costs, but it's only one piece of the puzzle.
Before applying, it's worth reviewing your credit and avoiding unnecessary new debt.
And here's a little advice: If you're planning to buy a home, now probably isn't the best time to finance that shiny new truck you've been eyeing.
3. You May Not Need 20% Down
This is one of the most common misconceptions I hear from homebuyers.
While putting 20% down can have advantages, many buyers qualify for programs requiring considerably less.
Depending on eligibility and loan type, options may include:
- Conventional loans: Some programs allow down payments as low as 3%.
- FHA loans: Down payments may be as low as 3.5% for qualified borrowers.
- VA loans: Eligible veterans and service members may qualify for zero down payment.
- Down payment assistance: Certain California programs may help eligible buyers with upfront costs.
Keep in mind that minimum down payments, loan limits, mortgage insurance, and other requirements vary by program.
My job is to help you explore the available options and determine what makes the most sense for your situation.
4. Have Your Financial Documents Ready
Getting preapproved doesn't have to be complicated, but having your paperwork organized can make the process much smoother.
Depending on your financial situation, your lender may request:
- Recent pay stubs
- W-2 forms from the past two years
- Federal tax returns, especially if you're self-employed
- Recent bank statements
- Documentation of additional income
- Information about existing debts and financial obligations
If you're self-employed or earn commission income, your documentation requirements may be different.
I've worked with borrowers from many different financial backgrounds over the years. The key is understanding your income situation before you find a house you want to purchase.
5. Don't Forget About Property Taxes, HOA Dues, and Other Expenses
Folsom offers a variety of housing options, from established neighborhoods to newer developments. But the purchase price is only part of the financial equation.
Some properties may have HOA dues, special assessments, or Mello-Roos taxes that affect your total monthly housing expense.
Two similarly priced homes can have noticeably different monthly costs.
This is especially important when comparing established neighborhoods with newer communities.
Before you make an offer, I recommend looking at the full estimated monthly payment, not just the principal and interest.
A beautiful kitchen is great. Discovering an unexpected monthly expense after closing? Not nearly as exciting.
6. Prequalified and Preapproved Aren't the Same Thing
These terms are often used interchangeably, but they can mean different things.
Prequalification is typically an initial estimate of what you might be able to borrow based on information you provide.
Preapproval generally involves a more detailed review of your credit, income, assets, and financial obligations.
The exact process varies by lender, and neither guarantees final loan approval.
Having a well-supported preapproval can help you shop with confidence and demonstrate to sellers that you're a serious buyer.
In a competitive housing market, that preparation can make a difference.
7. Work With Someone Who Understands Your Options
When you go directly to a bank, you're generally limited to the loan programs and lending guidelines that institution offers.
As a mortgage broker, I work with multiple wholesale lenders, giving me the ability to compare different financing options based on your needs.
That can be particularly helpful if you're self-employed, purchasing your first home, using VA benefits, or dealing with a less-than-traditional financial situation.
My office is located right here in Folsom, and I work with homebuyers throughout Sacramento, Placer, and El Dorado counties.
I believe getting a mortgage should involve straightforward answers, good communication, and someone who's willing to take the time to explain the process.
After more than two decades in this business, I can tell you that no two borrowers are exactly alike. That's why I don't believe in a one-size-fits-all approach.
Ready to Start Looking for a Home in Folsom?
Buying a home should be exciting, not overwhelming. And getting preapproved before you start seriously shopping is one of the smartest ways to prepare.
Whether you're a first-time buyer, relocating to the Sacramento area, or looking for your next home in Folsom, I'd be happy to help you understand your mortgage options.
I'm Rich Iacovetta with Barrett Financial Group LLC. I've been in the mortgage business since 2003, and my goal is simple: help you make informed decisions and make the mortgage process as straightforward as possible.
Before you start touring homes, let's have a conversation about what you can comfortably afford and which financing options may work best for you.
Making Mortgages Simple. Making Homeownership Possible.
