Why to Pre-Qualify For a Mortgage [mortgageinsuranceguide.blogspot.com]
Don't open new credit cards or take on more debt. -Get pre-qualified for a mortgage before shopping for a house, advises Greg McBride, senior financial analyst for Bankrate.com. -Shop for a good price on a house, but also shop for a good mortgage rate. Susan Tompor: Tempted by record low mortgage rates? Do your homework first
Before you apply for the mortgage, before you even start looking at houses, you are going to want to pre-qualify. There is no point putting the cart before the horse and all that sort of folksy sounding advice. Pre-qualifying is a process where a lender examines the buyer's credit profile (you'll want a good one), and debt to income ratio (you'll want a good one of those, too). This allows the lender to make an estimate on how much money they are willing to loan the buyer.
Doing this before hand helps the shopper determine how much they can afford to spend. A price range is a good thing. There is no point in bidding on or really even looking at a home that is 5 times out of your range. Sure it's fun to pretend you could afford a Malibu beach house, but the bank won't accept pretend money in payment for your loan. The pre-qualification protects the buyer from bidding on a house without having a lender letter stating that they are having the credit and potential to buy the house.
People selling their homes want buyers who are serious about buying them. Being pre-qualified allows the buyer to know who is serious, and who is wasting their time and maybe costing them a buyer.To pre-qualify the lender will need a list of your assets, liabilities, all sources of income, monthly payments and permission to run a credit report. An entire loan application shouldn't necessary at that time. The lender will do whatever magic they do and based on the afore mentioned debt to income ratio and their own guidelines give you an estimate on what they are likely be inclined to loan you.
Remember this isn't the actual loan. It's just you asking "If I were to ask for a loan, what would you say".
Much less scary. Suggest Why to Pre-Qualify For a Mortgage IssuesQuestion by JCMOM00: Does a pre-qualified mortgage letter means I have a good chance of being approved for a mortgage? I spoke with a chase representative and I received a pre-qualified letter for a mortgage. My credit score is in the uppers 690's(middle score) I have no debts and pay all my bills on times. I was wandering if the pre-qual letter means it's a good chance I will be approved for a mortgage. Best answer for Does a pre-qualified mortgage letter means I have a good chance of being approved for a mortgage?:
Answer by Elaine
no. a pre qualification means that they reviewed your basic info and you could possibly be approved for a mortgage. unfortunately in the world of financing we live in today, when you actually have all your docs reviewed by underwriters, there is much more to it than the prequalification. they take a lot more into account. its not to say you wont be approved (since i dont know the info on the property you want or your other statistics, like income or debt to income ratio etc) but basically you arent "all set". good luck though, its so stressful and im going through the process myself and its been a lonnnnng road. lenders are being extra cautious these days so its tough out there!!
Answer by Judy D
When a bank "pre Qualifies" you for a mortgage they usually give you an amount that you can get a mortgage for, that way you know how much you can borrow to pay for a house. Cal the bank and get them to clarify what the mean befo re you go house shopping. If you have $ 20,000 to put down and the bank pre qualifies you for an $ 80,000 loan you can buy a $ 100,000 house, so you would be wasting your time to look at houses that list for $ 300,000.
Answer by Katey
It means very little coming from Chase. They will send out letters and not approve people. So I would say that you have less chance than with other lenders pre-qualified letter because it's from Chase.
Answer by Landlord
When they do that they take you word for everything. After they research and verify teh answer can be different.
