Prequalify for a Mortgage

May 24, 2010
3 min. read time

Want to prequalify for a mortgage?

Sometimes applying for a mortgage loan can be the most practical way when deciding to purchase a home. However, this experience can soon become a problem when trying to get your application approved. For better chances of getting your mortgage loan approval, we have provided these simple guidelines.

If you have a low credit score, fix it.
The very first thing that a lender will do is review your FICO Score. So if you don’t have a good credit score, you will have less options or a low chance of getting an approval. Make sure, before calling your lender that you have your most recent credit score, from each of the 3 major reporting agencies. If you see any erroneous information, dispute it.

Pay down your credit card balance
It’s always good to start with a clean slate. If you are a First Time Home-Buyer one very important thing to know is how to budget your cards. Keep a very low balance on your cards. This can greatly improve your chances of approval when applying for a home loan.

Prepare your money for the 20% down payment.
The hardest part is the most valuable part, right? And that’s getting the money you need for your down payment. But when you actually start paying on your mortgage, a great chunk of your monthly payments are towards your (PMI) Private Mortgage Insurance if you have less than a 20% down payment. So save until you are ready!

These steps relieve the most important and daunting experiences when attempting to purchase a home. Now when approaching a lender it’s going to feel a bit better.

Here are some documents that will come into play during the pre-qualification process:

  • Financial statements – this document indicates your monthly payments and other expenses, we can help you prepare these documents. This document creates the best profile for your loan application.
  • Credit Report – Make sure you have a copy of your credit of your credit report. Double check it and make sure there aren’t any inconsistencies make sure you have impressive assessments.
  • Pre Qualification Letter – Ask, from your lender for your pre-qualification letter. You’ll need this document as this letter contains all the information about you and your desire to purchase a home. It will also present you with a price range so you will be aware of what type of property you can afford.

The pre qualification letter is an indication that you are serious in purchasing a home or property. The seller will also pay more attention to your application if you have a pre qualification letter.

Once you prequalify and your loan is approved you should make sure that you don’t change anything important in that profile, don’t buy a new car, try not to lose your job, etc. Reportedly, there are many instances where people change things. Work with your loan officer; tell them everything about your financial situation that can impact your credit score.

Now, all your documents are in place, you have a beautiful set of FICO Scores and soon you’ll have your new home!

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