At ER Morgan Realty
We believe home financing should be clear, honest, and stress-free. Whether you are a first-time buyer or a seasoned investor, our in-house mortgage services help you understand your options and make confident decisions every step of the way.
Pre-Approval vs. Pre-Qualification
A pre-qualification is a quick conversation with a lender based on unverified information — great for getting a general idea of your budget.
A pre-approval, however, is a verified evaluation of your finances and credit, resulting in a formal letter from your lender. This letter shows sellers you are serious and ready to buy.
Best Practice: Always include a Pre-Approval Letter or Proof of Funds (POF) with every offer. It strengthens your position and can help you close faster.
Understanding Your Payment (PITI)
Your monthly mortgage payment typically includes:
Principal: The amount borrowed for your loan.
Interest: The cost of borrowing money, expressed as a yearly percentage.
Taxes: Property taxes determined by local government assessments.
Insurance: Homeowners insurance (and sometimes mortgage insurance) that protects your property and investment.
Together, these are often referred to as PITI — Principal, Interest, Taxes, and Insurance.
How Much Do You Need to Buy a Home?
A 20% down payment is ideal — it often secures a better interest rate and eliminates mortgage insurance.
But don’t worry: many buyers qualify with much less.
Example:
FHA Down Payment: 3.5% of Loan Amount
$300,000 home × 3.5% = $10,500
Additional costs (appraisal, inspection, etc.): ≈ 2.5% = $7,500
Total Estimated Out-of-Pocket: $18,000
These are only examples — actual costs vary based on loan program and lender terms.
How Much Should You Borrow?
Only borrow what fits comfortably within your monthly budget.
Your Debt-to-Income (DTI) ratio helps determine this:
Front Ratio: Percentage of your income spent on housing costs. (Ideal ≤ 28%)
Back Ratio: Percentage of your income spent on all debts combined. (Ideal ≤ 36%)
Keeping these numbers low ensures long-term financial comfort and stability.
Documents You’ll Need for Pre-Approval
Lenders will ask for documentation to verify your income, employment, and financial stability.
Here’s what you’ll typically need:
Employment & Income
W2 forms (last 2 years)
Recent pay stubs (1–3 months)
Tax returns (last 2 years)
If Self-Employed
Business & personal tax returns (2 years)
Year-to-date profit & loss statement and balance sheet
Debts & Credit
Credit report and score
Statements for credit cards, car loans, student loans, etc.
Assets & Down Payment
Recent bank statements (2 months)
Retirement or investment account statements
Residence History
Landlord contact (if renting)
Mortgage info (if you already own a home)
Ready To Get Started?
Let us help you take the first step toward homeownership.
We’ll connect you with trusted lenders, walk you through pre-approval, and guide you from offer to closing.