Pre-qualifying for a mortgage is usually the first step people take when they begin the journey of home financing. In order to become pre-qualified, you’ll need to provide certain information to your lender. In this post, we’ll review which information and documentation you will need, as well as give you an overview of what pre-qualification actually means.
What is pre-qualification?
First thing’s first. What does it really mean if you are pre-qualified for a mortgage? Essentially, it means that your lender has begun the initial tasks of helping you find a home loan and has come up with an estimate of how much you might be able to borrow. It does NOT mean that you are approved for a mortgage and it is not a commitment to lend you any amount of money.
Pre-qualification simply provides you with an estimate of your borrowing power, based on the information you have provided to the lender. Usually, pre-qualification can be done online or over the phone and is typically offered at no cost.
Pre-approval, by contrast, is when your lender has verified the information you’ve provided and has come up with a more accurate estimate of how much money they will let you borrow. Even with a pre-approval however, there is not necessarily a commitment to lend.
So what do you need to get pre-qualifed?
In order to get pre-qualified for a mortgage, you will most likely need to provide a lender with the following information:
- personal information such as full name, address, social security number, date of birth, etc.
- yearly and/or monthly income and assets
- estimated credit score (sometimes pre-qualification involves a credit check, but not always)
If your spouse is going to be on the mortgage, you will also need to provide the above information for him/her.
Your lender will look at the information you provide and determine your pre-qualification status based only on the info you’ve provided. At this point, your information will not be verified. However, if you seek pre-approval and are serious about getting a loan, the information you provide will need to be verified and will need to meet the requirements of the lending company and/or the loan program.
Which is better, pre-qualification or pre-approval?
Pre-qualification can be done quickly and with little to no cost, making it a great first step in the mortgage process. However, if you are serious about buying a home, it is best to get pre-approved from your lender.
Being pre-approved helps you have a solid idea of what you can afford, and allows you to have more strength as a buyer. Home sellers are usually more willing to work with you if you’re pre-approved because they know you’re serious and you’ve already taken the steps required to secure your financing.
Any questions? Don’t hesitate to contact one of our loan experts to learn more about mortgage pre-qualification and pre-approval. We’ll be happy to answer your questions and get you on the path to homeownership. Give us a call to request more information.
Call us today: (888) 379-0303
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Stamford, CT 06901