What does it mean to “pre-qualify” for a home mortgage loan?
If you've begun the search for a new home and are going through the mortgage process and you've probably heard the term pre- qualification. Many websites of lenders have an area that you can easily click on that typically says “click here to prequalify”. It sounds like a simple and easy process and it pretty much is, however there are some things you should know about what prequalification means before you click that link.
What does it mean to prequalify?
Basically when you prequalify for a loan you will be given basic idea of the amount that you are eligible to borrow. This in no way guarantees you that lending amount. It is just a stepping stone to the larger and more in-depth process of securing a mortgage. In fact pre-qualification is the prequel to getting preapproved for a loan.
How does it work?
In the prequalification process, the lender will review the basics of your financial situation and base the loan amount on those numbers. It is more or less a free service of a mortgage lender and is meant to draw you in as a possible customer. In order to prequalify for a loan, you don't have to provide too much information. The basics include your name, phone number and a few pieces of your financial background. The next step is that you will be contacted by the lender and they will tell you generally how much you can borrow or whether you could be approved for a loan or not. You are also not obligated to even use that lender when you secure an actual loan.
Is prequalification necessary for me to get a loan?
If you are looking for a new home, it is likely that the seller will not take into account if you have been prequalified for a loan. Since it doesn't guarantee financing or a loan it won't really matter. The more important thing that you need to do is get pre-approval rather than prequalification.
Why should I click the prequalify link?
Prequalification is mainly for your own purposes to reach out to a variety of lenders. It is a tool that will get you a call back or an email from different mortgage companies. There is no guarantee that you will qualify for a loan from these companies but it will get the ball rolling a little quicker with lenders. It may also help you determine if this is the right time for you to buy or not.
As far as prequalifying for a mortgage goes it is not necessary, what's better is getting preapproved for a mortgage. However, going through the prequalification process is helpful to get things moving with your home mortgage search. If you are in the market for a new home, contact the lending experts at Florida Real Estate Lending. Our experienced agents will help you find the best mortgage and interest rates so that you can soon be in your dream home. 888-631-5993