Problem: once you know your monthly budget, how do you know how much that will be in mortgage dollars to spend on a home?

Solution: prequalify at a bank

• Virtually every institutional lender will tell you for free how much they will loan you and at what rate. They will also tell you how long they will "hold the rate" for you. Do not sign anything at this stage!!! All you want to know is how much you can spend.
• Once you have done this - you need not commit - wait until after you have entered into a binding Agreement of Purchase and Sale
• If you are considering buying a New Home from a builder, you should be aware that many builders will have made an arrangement with a lender for a discount program or have some special long term capped rate deal for that particular site. Look into these! - they may be a better deal than what you could have otherwise prequalified for. This is especially true in a market where interest rates are rising! There is no harm in prequalifying for a mortgage arranged through the Builder instead of your own bank - you may need the special long term hold on rates if the market rises between the time you buy and when you close.

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