Breaking Down Pre-Qualification
The excitement that comes with shopping for a home can quickly turn into frustration if you enter the market unprepared. This is why it is essential to get pre-qualified, to avoid uncertainties and even second-guessing yourself. Pre-qualification provides you with a ballpark figure of how much house you could afford. Also allows you to budget for your purchase and focuses your home search with peace-of-mind.
What is Mortgage Pre-Qualification?
Pre-qualification is a fancy word for estimating the maximum home price you can afford without affecting your credit. It is the first step towards getting a mortgage.
Most of the information used to evaluate a pre-qualification report like income, assets and any other debt, is provided by you. It doesn’t have any impact on your credit (score) but is still capable of verifying how much you can qualify for in terms of a mortgage. When you’re pre-qualified for a mortgage, you’ll get an estimate of:
- Mortgage Loan Amount
- Mortgage Payments
- Stress Test Rate
Pre-qualification also helps Mortgage professionals to gather required information for an initial assessment of your purchase power as well as identify potential areas for improving your file before submitting it to a lender. i.e. special DP programs, lowering unsecured debt, credit score improvements.
Benefits of being Pre-Qualified
Pre-Qualification provides additional security in knowing that you meet the initial requirements. With a detailed pre-qualification report, you can filter out houses that fall outside your limit, which puts you in a stronger position when negotiating and demonstrates to sellers that you are a serious buyer.
Your loan will process faster! Because you’ve been pre-qualified. You have gotten a jump start on the process for applying for a home loan, which is fantastic news! This means it will be less likely you will incur hold-ups when buying your home. You should experience a nice, smooth, hopefully, stress-free as possible, home buying process and meet all of your necessary deadlines.