Why You Should Consider Mortgage Prequalification
When starting your homebuying journey, it’s important to have a clear view of what you can afford before you start looking. Mortgage prequalification isn’t a loan guarantee, but it is a simple process that can give you more confidence when narrowing your search.
This blog will further highlight what mortgage prequalification is and how it can assist you in the homebuying process.
What Is Mortgage Prequalification?
Mortgage prequalification allows you to make a more informed decision. Through this process, you will be introduced to different types of mortgages, from government-backed loans to first-time homebuyer programs, giving you a better idea of what’s available to you when buying a home.
To get prequalified, you need to provide some basic information about your savings, income, and desired loan amounts. Lenders will use this information and perform a credit check to determine your creditworthiness. Since mortgage prequalification relies on self-reported data, it is not a guarantee of mortgage approval.
Information Needed for Mortgage Prequalification
The mortgage prequalification application usually requires you to provide basic information about your personal finances. Whether you complete this process online or in person, below are some of the things you will need to know before applying:
- Income: A generalized preview of your annual income helps to assess your debt-to-income ratio.
- Bank Accounts and Assets: Providing your bank account balances, cash, and other assets gives lenders confidence you can make the down payment and mortgage payments.
- Outstanding Debts: Providing your debt information gives lenders a clearer view of your overall financial situation.
- Anticipated Down Payment: Sharing the amount you plan to use as your down payment amount helps lenders determine your loan options.
Getting a Prequalification Letter
A prequalification letter outlines what a lender is willing to lend you based on your self-reported financial information. This letter helps add credibility to your offers and shows sellers you’re serious. This is not a loan guarantee and it involves a hard credit inquiry, which could affect your credit score.
If you’re ready to get started, request a prequalification letter by filling out an online application or by talking to one of our loan officers.