How to Prequalify for a Mortgage Home Loan

What is prequalification? It is basically a green light from a lender on the amount of mortgage loan you qualify for. Usually, you will receive a black and white from the lender.

 

How to Prequalify for a Mortgage Home Loan?

  • It is a wise move to use a mortgage prequalification calculator online to calculate the estimated maximum loan amount you may qualify. What you usually need to enter to the calculator are sale price of the property, your income, your liability (debts, alimony, child support, liens etc), funds available and interest rate of your loan program. After fill out the details, you should have an idea of your prequalified mortgage amount.

  • Next thing you are going to do is to get a lender to do the real prequalification for you. You can get a referral from people surrounding who may have done this. Alternatively, go online and search for lenders who offer the service to prequalify you online.

  • After locating the lender, they would ask the details from you. The details you need to provide usually quite similar to the details you entered to the prequalification calculator mentioned earlier. You may also need to authorize the lender to obtain a copy of your FICOŽ score. The FICOŽ score is a point system used by lenders to evaluate their risks of lending their money to a particular person. There are basically 5 categories which determine your FICOŽ score: Payment history, amount owed, length of credit history, new credit and types of credit used.

  • The lender will then prepare a letter of prequalification for you. In the letter, there would usually be comments on your financial and credit report which have been reviewed and satisfied with.

You should take note that by obtaining the prequalification letter does not guarantee you a mortgage loan. But, it do help to make you the priority over the rests in multi-offer situations.

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