Growing up, most of us heard the words “be prepared”. Although it sounds ominous, this advice is applied to most aspects of life, including home buying. In order for the loan process to run smoothly, one of the smartest things to do is get pre-qualified for a mortgage. A pre-qualification is an estimate of how much you can borrow from a lender and it allows you to explore loan options specific to your financial situation. Pre-qualifying for a loan before you go home shopping helps you set a budget and strengthen your negotiating position when making an offer.
How to pre-qualify
Pre-qualification is a simple process which can be done at zero cost and completed online or in person. Contact your Loan Officer to find out which documents you should prepare and to complete the pre-qualification form. Once you pre-qualify successfully, you can request a letter stating how much you may be able to borrow based on the information you provided. You can share this with your real estate agent or simply tell the agent a price range based on the outcome of your pre-qualification.
Pre-qualification vs. conditional approval
A conditional approval requires more information and is a much more serious level of approval. Conditional approval means you will have a commitment to a specific loan program at a specific loan amount. It will also provide more information about your interest rate and monthly mortgage payment.
Before you start your journey as a home buyer, the best place to start is by contacting your Loan Officer and getting pre-qualified