Pre-qualification provides buyers with insight into how much money they can borrow to purchase a home. It also gives them the chance to make sure they are ready to buy a home and will likely qualify for a mortgage once they’re ready to do so. Plus, pre-qualification can look better to sellers when the buyer makes an offer on a home, giving the buyer a higher chance of their offer being accepted. When it’s time to start looking around, start with a pre-qualification. The following steps make this easy to do.
Visit the Lender’s Website
Always take a look at the lender’s website. This will provide information on how to fill out an application online or in person. It’s also possible to learn more about the basic requirements borrowers need to meet to become pre-qualified for a loan. Reading through the application provides the borrower with the opportunity to find out what documents the borrower will need to gather for submission.
Make Sure You Meet Requirements
Borrowers will want to check out any requirements from the lender to ensure the best chance possible to qualify. Lenders typically look at the borrower’s financial situation, including the credit score, when making a decision. Borrowers can check out their credit scores through the major credit bureaus or other websites.
If the credit score is not as high as expected, the borrower may be able to take steps to fix it. This could include removing anything that shouldn’t be there or paying off debt to increase the score. Some changes will happen quickly, so there may not be a lot of time to fix it. Generally, the higher the borrower’s credit score is, the better a deal the borrower can get on any mortgage and the more likely they are to be pre-qualified.
Fill Out Application for Pre-Qualification
When the borrower is ready, the borrower will need to fill out the application to become pre-qualified. Many lenders now offer online applications, making the process easier. Borrowers will need to be prepared to upload documents confirming identity as well as financial documents for lender review. The application process generally isn’t long since this is just a pre-qualification, but borrowers should make sure they have plenty of time to make sure everything is accurate before submission.
Receive a Result From the Lender
Once the lender receives the application, the lender will generally run a soft credit check on the borrower and review all information contained in the application. A soft credit check doesn’t have an impact on the credit score, so this will not impact the borrower if the borrower attempts to get a mortgage soon. The lender will make a decision based on the information in the application and will let the borrower know the result. If the borrower is pre-qualified, they’ll have more information about how much the individual can borrow and how much the borrower can afford. This helps the borrower cut down on time looking at homes that may not have everything or that may be too expensive.
Start Shopping, But Remember to Become Approved
After being pre-qualified, borrowers can start shopping for a home. They’ll know how much they can spend and that they are likely to receive a mortgage from the lender that did the pre-qualification. It is important to note, however, that this is not a pre-approval and the borrower won’t necessarily be approved for a mortgage or the full amount stated in the pre-qualification.
This is especially true if anything negatively impacts the borrower’s finances between the pre-qualification and when the borrower puts in an offer on the home. For this reason, borrowers will want to make sure they are pre-approved for a loan. The pre-qualification is an important step that can give them more information before taking the next steps in the home buying process, though, so its importance should not be overlooked.
Are you ready to buy a home? The best way to truly answer that question is through a pre-qualification from a lender. Getting pre-qualified gives you the chance to make sure you’re ready or to learn what you need to do to make sure you can qualify for a mortgage. Follow the steps here to pre-qualify for a loan today and make sure you have everything needed before you start looking at homes. This extra step can give you the confidence needed to jump into the home buying process, allowing you to find and purchase the perfect home.
Contact Fellowship Home Loans to begin your prequalification now!