Getting pre-approved means you receive a loan commitment from me before you have found a home, based on a review of your credit and finances. Having your credit pre-approved shows sellers that you’re a qualified buyer and helps you establish a clear price range. The process is the same as a typical mortgage application, except that your application doesn’t include property information.

Lenders consider many factors in evaluating your loan application, but they usually focus on four areas:

• Income and debt - How much money you make and what other bills you have to pay help the lender determine whether you can afford to make mortgage payments.

• Employment - Length and job stability is important in determining a client’s willingness to pay.

• Assets - The lender needs to make sure you have enough money to cover the costs of buying a home.

• Credit - Whether you’ve met other financial obligations helps the lender predict whether you will repay your mortgage.

• Property - The home you want to buy has to be worth enough to act as collateral for the mortgage.

• Most mortgage loans have either a fixed interest rate or an adjustable interest rate (click here to view mortgage products from Efinity Mortgage). With a fixed-rate mortgage, the interest rate never changes and your payments remain stable throughout the life of your loan. With an adjustable-rate mortgage (ARM), the interest rate changes at regular intervals — usually once every year — based on a formula that uses a market index.

• For most ARM options, rate adjustments begin after an initial period — usually between three months and ten years — during which the rate is fixed.

• A fixed rate is usually recommended if you plan to stay in your home for the long term and are buying at a time when rates are relatively low. An ARM is usually recommended if you plan to move before the rate adjustments begin, or if you are buying when rates are relatively high.

Locking your interest rate means we guarantee the rate on your loan even if market rates changes for a set period of time. So how do you know whether to lock your interest rate? It depends on whether you expect rates to rise or fall before you close on your home. No one knows for sure which direction rates will go at a given time, so it’s difficult to make a reliable prediction.