When it comes to financing the purchase of a house, getting pre-qualified for a mortgage is the first step in what’s sure to be an exciting journey toward homeownership. While some borrowers choose to forgo pre-qualification, they’re missing out on several valuable benefits. If you don’t fully understand the importance of pre-qualification or you aren’t sure how to get pre-qualified for a mortgage, scroll down for help.
The Benefits of Pre-Qualification
As Investopedia explains, pre-qualification is basically an evaluation of a potential borrower’s creditworthiness. When you get pre-qualified for a mortgage, you take the initial step toward securing a home loan by asking a lender to review your credit and offer a preliminary opinion on their willingness to extend a loan to you. In fact, many experts say that getting pre-qualified should be the way that you start your home search and recommend that you complete the process before you even begin attending open houses and looking at homes for sale. Pre-qualification offers several significant benefits:
- Pre-qualification can help you discover what types of loans are available to you.
- When you get pre-qualified, your lender provides you with an estimate of the amount that you can likely afford to borrow.
- Knowing the size of the loan that you qualify for allows you to save time and effort by only looking at houses with suitable price tags.
- Seeking pre-qualification can help you spot any issues that might prevent you from getting a mortgage so that you can take steps to resolve them before they derail your house hunt.
- Pre-qualified borrowers are taken more seriously because they can make an offer immediately.
- Real estate agents tend to respond more readily to pre-qualified borrowers who are ready to buy.
- Sellers often favor pre-qualified borrowers over those who haven’t gotten their financing started, so pre-qualification can increase your negotiating power.
If you want to take advantage of these benefits, you simply need to get pre-qualified. The process is surprisingly easy.
How to Get Pre-Qualified for a Mortgage
The Pre-Qualification Process
Most people seek pre-qualification online or over the phone. To get started, choose a reputable lender. If you are nervous about buying a home, are making your first home purchase, or have a strong preference for a smooth, hassle-free transaction, it’s a good idea to look for a lender who excels at customer service. Then, contact your chosen lender to request a pre-qualification. In most cases, there’s no charge for getting pre-qualified, and you’ll generally have an answer in a few days.
To prepare for pre-qualification, you should be ready to provide information about your income and your debts (source). You’ll also need to be prepared to answer questions about your credit history and your savings. Because pre-qualification only requires a cursory check of your financial situation, you generally do not need to provide any actual documentation, and in most cases, no credit report is pulled. You simply need to provide the lender with the requested figures. As SmartAsset explains, the lender will use the numbers that you give them to calculate your debt-to-income ratio and predict the type and size of the loan for which you are likely to qualify. Finally, they’ll provide you with a letter identifying you as pre-qualified. Although documentation isn’t required, it’s best to be as accurate as possible during the pre-qualification process. Providing your lender with accurate information allows them to prepare a better evaluation of your creditworthiness.
Pre-Qualification vs. Preapproval
When discussing how to get pre-qualified for a mortgage, it’s important to make clear the difference between pre-qualification and preapproval. As Zillow explains, although they are similar in meaning, the two terms are not quite synonymous.
Both are offered by lenders after they have considered your credit, and both provide estimates of how much you will be able to borrow. However, pre-qualification is a quick process that uses a superficial examination of your credit to give you an idea of the type of loan for which you’re likely to be eligible. Preauthorization delves deeper into your financial situation. When seeking preapproval for a mortgage, it’s not enough to just fill in the blanks with the appropriate numbers; you must also provide the documentation to back your figures up in the form of paycheck stubs, bank statements, tax documents, and other financial records. Since a preapproval takes a more serious look at your financial situation and requires more effort to obtain, it tends to garner greater respect from real estate agents and sellers. However, neither pre-qualification nor preapproval is a guarantee that you’ll qualify for a loan.
Are you ready to get pre-qualified for a mortgage? PrimeLending Twin Cities makes it easy. Pre-qualification is free, and we’re ready to offer the support and guidance you need. We offer a wide array of loan programs, so we can match you with the right loan for your unique needs and goals. Contact us today to explore the possibilities and secure your pre-qualification.