Home Loan Prequalification

What does it mean to pre-qualify for a home loan? Basically you get together with your lender and they determine how much you would be able to borrow based on your credit report, employment, assets, and overall income. The process is also known as pre-approval. There are several advantages to seeking financing this way:

• Knowing how much you can borrow
• Not waiting to be approved and losing your chance to buy a particular home
• Getting your financial information organized
• Peace of mind

When you find out how much you qualify for regarding a mortgage, you’re aware right away of what homes are realistic for you to even look at. It’s a lot better than being disappointed down the road. For instance, you won’t have to find your dream home only to be told it’s beyond your budget. As the old saying tells us, you won’t be putting the “cart before the horse”.

It’s an especially good idea to obtain a home loan prequalification when the housing market is hot. In this type of atmosphere, those who can come up with the asking price, or even more first will win out. Buyers and sellers become extremely competitive, and the process moves fast. Since you’ve already been approved for a certain amount, you have an excellent chance of being the new owner of the house you want.

If you’ve ever purchased real estate before, you’ll know that your bank or mortgage company will go through your records with a fine tooth comb. There is a lot of paperwork to fill out and you have to gather all sorts of information together in order to do your part. If you get this taken care of before you make an offer on a house, all the hard work it takes to get organized will be done.

Probably the major benefit of the home loan prequalification is the peace of mind. You’ll already know how much money you qualify for, so the chances are good that you can buy the house you choose, since the lender has underwritten your offer already.

There are more hoops to jump through of course. The property is subject to an appraisal, title verification, contract approval, among other things. At least when you’ve been pre-qualified for your home loan, the chances are much greater that you’ll be the new owner of your dream home.