What to know before you act
A useful home-buying budget begins before a lender tells you the maximum loan you might qualify for. Include the mortgage payment, taxes, insurance, association charges and ongoing ownership costs, then leave room for the savings and other priorities you want to protect. The amount a lender may approve and the payment you want to live with are related but separate decisions.
Prequalification and preapproval terminology can vary by lender. Ask what information has actually been reviewed, what remains conditional and how long the decision is valid. A letter does not replace review of the property or guarantee closing. When you have a specific transaction, compare written loan terms using the same amount, product, points and lock period so that market timing or different assumptions do not obscure the cost.
Cash to close includes more than a down payment and can change as estimates become final. Review prepaid items, escrow funding, deposits and credits alongside lender fees. For an adjustable rate or temporary buy-down, understand the payment after the introductory period. Protect the timeline by asking about the remaining steps, and keep enough reserves to handle moving, repairs and an unexpected expense after the keys are yours.
Three questions to bring to the comparison
- What was actually reviewed for my preapproval?
- How much cash remains after closing and moving?
- Which parts of my payment can change?