Getting Pre-Qualified for a Loan

The process of getting pre-qualified for a loan involves you, the prospective buyer, working with a lender (i.e. a bank or other loan agency) to determine the amount of money they'll let you borrow to buy a home. The lender may or may not be part of a bank, but they will always work with a bank to determine the terms of your loan. This process is generally free and will require you, the buyer, to disclose various financial information to a licensed loan officer (representing the lender).

Pre-qualifying for a home is important because it tells you, the buyer, how expensive of home you can afford.

The size of loan you pre-qualify for will depend on three primary factors:

1) Your ability to pay off the loan. Your lender will likely ask about your income, education level, current debt, etc.)

2) Your willingness to make payments. Your lender review your credit history and ask whether or not you'll be living in the home you're planning to purchase)

3) The amount of your down payment. Depending on qualifying factors (credit score, low income, military status, etc.) required down payments can range anywhere between 3.5% and 20% of the home's value.

Lower down payments are generally compensated for through mortgage insurance - a monthly fee added to your mortgage payment. Mortgage insurance is not permanent for the life of the loan and can be eliminated after paying off a certain percentage of the home (e.g. 20%) or through a re-finance. 

As long as all the needed information is disclosed, the process can be complete within a couple of days.

A good loan officer will communicate with you in a timely manner while providing you with the best options for getting a loan that works for you. Different lenders provide different types of loans so it can be helpful to shop around if you're unable to pre-qualify for your desired loan amount.

While you are free to work with any lender you wish, I have several I work with regularly and would recommend to you. Please contact me if you would like a recommendation.