how to get prequalified for a home loan

How to Get Prequalified for a Home Loan

When you’re looking to buy property, it’s advisable to approach the process through a series of steps. Each step is important, and will help ensure the process runs as smoothly and efficiently as possible. The first step is to get prequalified for your home loan/mortgage. 

What is Prequalification?

Getting prequalified for a home loan provides you with an initial estimate of the size of the loan you’ll qualify for, as well as the approximate interest rate, and potential monthly payments. Having that information in advance will save you time and help you avoid stress when you’re ready to begin looking for a new home. It’s a simple step you should take before beginning the formal application process, and only requires 10-15 minutes of your time to answer a few questions about your income, assets, debt, and estimated credit score. Additionally, you can expect to have an answer within just a few hours. Global Realty & Finance can help you take care of the prequalification process by phone or through our online application.

There are no risks or costs involved, and because it’s so simple and provides you with an advantage, there’s virtually no reason to not get prequalified for a mortgage. After answering a few questions, you’ll receive a letter indicating the loan amount you’ve been prequalified for, which you can and should use when you begin searching for the perfect home. 

Benefits to Mortgage Prequalification:

Taking advantage of mortgage prequalification before you begin looking for a property will save you time by:

  • Only reviewing homes in your price range
  • Discovering any credit problems so you can resolve them early
  • Allowing you to make a confident offer immediately after finding a home you prefer
  • Increasing the likelihood your offer will be accepted 
  • Increasing the support you receive from a real estate agent because it demonstrates you’re serious about buying

Although getting prequalified for your mortgage isn’t technically required, it’s highly recommended. Sellers are hesitant to enter into a contract with a buyer who can’t perform on the contract. One of the first questions we ask is whether or not potential buyers have determined their prequalification status. If you have, it puts you one step ahead, and we keep a copy of your prequalification letter on file when negotiating you the best available mortgage rate. 

Home Loan Preapproval:

Getting preapproved for a home loan is the second step you should take before seeking out your next property. Although preapproval takes a bit more time, by planning ahead and making the commitment to do so you can distinguish yourself even further from the often crowded field of buyers. A seller views an offer backed by preapproved financing as stronger and more attractive than all other offers. 

Being prequalified means you have estimates for your prospective loan amount, interest rate, and monthly payment. But those numbers aren’t absolutely guaranteed. Preapproval, however, not only begins the formal application process, but it also provides you with specific hard numbers based on a thorough background check by lenders. This carries more weight than simply being prequalified, and by doing both you’ll be viewed as a more appealing buyer, and ahead of those who were only prequalified. 

Preapproval does require more time than prequalification, and it’s a good idea to start gathering documents including: tax records, banking statements, investment information, etc. It will also require a credit check and a close examination of your asset-to-debt ratio. But, it will ultimately save you time in the end and puts you in the best position to buy. 

Benefits of Being Preapproved for a Mortgage:

Preapproval takes you much further through the application process, which will allow you to:

  • Move quickly once you find the home you want
  • Close your loan faster because most of the paperwork will already be completed
  • Separate yourself from other buyers by having preapproved financing
  • Sellers will view your offer more favorably because it is less likely to be delayed

Preapproval takes care of most of the work that is required throughout the mortgage process. It provides you with peace of mind when you reach the point of making an offer on a home. Once you’re preapproved, you should have approximately 2-3 months to view homes and make offers confidently, knowing sellers will view you favorably as a buyer. 

After preapproval is completed, the next steps to finalizing your mortgage will likely include:

  • A home inspection to review the property, ensure it’s in good condition, and check for any deficiencies that could require repairs or additional money
  • A home appraisal to ensure the advertised purchase price accurately reflects the current market value of similar homes in the area
  • All the application paperwork and financial documents you submitted will be double-checked and verified for accuracy. If there are any issues, Global Realty & Finance will work with you to resolve them as soon as possible.

Prequalification versus Preapproval:

Prequalification is based on data you provide to us, which will give you the first perspective of how much you will be able to borrow, and at what rate. Preapproval is a deeper glimpse into your financial records, and provides you with definitive numbers regarding your loan amount, your interest rate, and your monthly payments. Both steps are important and offer you an advantage in a highly competitive buyer’s market. 

At Global Realty & Finance, we recommend starting the preapproval process immediately, and then gathering your necessary paperwork to start the preapproval process. We can help you determine which documents you will need and where to find them.

Ready to get started?

Call or click to contact us today and start the process immediately. By providing us with your basic financial information we can get started on securing your prequalification letter while you gather the necessary documents for preapproval. 

Taking these two steps will start the formal application process and ensure you have every advantage available compared to other buyers. It’s a competitive market, and you want to be sure that you’ve done everything possible to put yourself in the best position, so when you find your dream home you’ll be able to move quickly to make it yours. Losing out on a home you want because you haven’t been preapproved is entirely avoidable. 

And by working with Global Realty & Finance, you can be sure that you will find the lowest rate from a trusted lender without hidden fees. GR&F negotiates with multiple top lenders to secure you the lowest rate through a smooth and efficient process from start to finish. 

We’ll work with you throughout the entire process to make things simple, and we’re always here to answer any questions you have.

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