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
