You should get pre-approval for a loan if you are thinking about buying a home. Your pre-approval is subject to your finances at the time.

When the lender has pre-approved you for a home of $125,000. At 7% interest for 30 years, your payments will be around $831 a month including principal and interest. If you make a purchase of $100.00 per month. The lender will reevaluate your pre-approval. You will have dropped your home purchase from $125,000 to about $110,000.

Do not consider making any large purchases until after closing.

A home purchase is one of the largest personal investments one can make. Take the time to make a plan of action.

How much can you afford to pay for your home? If you're not sure, find a lender and get pre-approved. Pre-approval will let you know how much you can afford so that you can look for homes in your price range. Getting pre-approved helps you know exactly what amount qualify for, the interest rate, you will know how large your monthly payments will be, and you know how much you will have for a down payment. Once you are pre-approved, you can avoid homes that are not in your price range.

Then, ask yourself where you want to live and what is the best location for you and your family. Consider:

* convenience, school, crime rate, local transportation, business environment, types of homes in neighborhood.

Getting pre-qualified can be done over the phone, even the Internet. Based on general questions about your income, debt, assets, and credit history, lenders can estimate how much mortgage you qualify for. However, being pre-qualified is no longer the way to go. Pre-approval means that you have applied for a mortgage; you have filled out the mortgage application, the lender has received your credit report, and verified your employment, assets, etc. When you are pre-approved, you know exactly what the maximum loan amount will be.

When you have a pre-approval letter from the lender, the seller may know exactly how much house you can afford. It gives you credibility as an interested buyer and lets the seller know immediately that you will qualify for a loan to buy their property.