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The Need for Pre-qualification in Mortgage

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By : Vicki Hat    99 or more times read
Buying a home isn't an easy process. There are so many things to think about. You have to prepare certain documents, prepare your finances, deal with sellers and hungry real estate agents, compete with other buyers. In short, it is very tedious.

However, this is just the price that you have to pay when you want to own your own home. Any homebuyer has got to prepare him or herself for the challenges involved in this process.

Among all the preparations required, the first thing that you should be worry about is your finances. Buying a home is basically a financial transaction and it involves tons of money. Sometimes, your available cash may not be even enough to cover the down-payment and other expenses.

If you are not certain with your finances, you may get into trouble in the future. One needs to be accurate in determining whether buying a home is right for him or her at that certain period.

Pre-qualification Helps Erase Doubts

There may be a point that you just think you can afford to buy a house but isn't just certain. And even if you are sure you want to buy a house, you just do not know which lender to go to. If you want to go out shopping without fix plans, getting pre-qualified can open your eyes to what you can afford.

Pre-qualification isn't your approval to get a loan. It is basically seeking the opinion of the lender on what you can borrow, what rates you qualify for the type of loan assumed to be obtained and the term of the loan. The opinion is formulated based on their interview and the data you provided. There is nothing too in-depth about this evaluation as no credit investigation will take place or even background checks. They will simply ask information from you and Social security number and on they go making calculations to determine if your income can cover additional expenses such as home buying.

Pre-qualification is not pre-approval

Many people might think getting pre-qualified will get them the loan. As mentioned above, no credit check or in-depth verification or investigation will be performed. There is no underwriting process involved. Pre-approval does.

Pre-qualification can help you a lot. Although, in a hot market, this may not be an advantage for you since it is not as accurate as pre-approval. However, you can get more reliable information from your lender if you do the following:

  1. Make sure the data needed by the lender is readily available.
  2. You provide accurate information.

Either way, pre-qualification can still give additional confidence to the buyer in bidding for the buying price even if isn't as accurate as the data reflected in the pre-approval letter.

How to Get Pre-qualified

Getting pre-qualified can be done if you visit banks or mortgage companies. You can even do it over the phone or over the web. However, to get a good lender, ask referrals from friends. Or you can look at the yellow pages and go with the most popular company. Just make sure you chose a good lender, build a good relationship with them and seek their opinion on how you can get cheaper mortgage deals. Who knows, you may end up working with them in the near future.
Find more real estate tips when you visit Community Pool in Oceanside, Affordable Homes for Sale in Oceanside and Townhouses for Sale in Oceanside.

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