Whether you’re a first-time home buyer, thinking about building, or taking steps towards purchasing an investment property, it’s important to start the process by being well prepared. While obtaining a mortgage loan can seem complex at times, having an experienced lender on your side to help you through the groundwork can make all the difference in your home buying experience.
Before diving right in to house hunting and starting conversations with a realtor or seller, you should consider the benefits of working with a trusted lender for a prequalification. So, what is a pre-qualification and how it can help to set you up for success?
What is a prequalification?
A prequalification is an assessment by a lender to review provided financial information (income, debts, assets, and other liabilities you may have) and helps determine what mortgage options are available to best suit your needs.
When should I get a pre-qualification?
It’s important to understand what you can reasonably afford before starting your home search. Regardless of if you plan to buy or build 6 months or a year from now, it’s not too early to get pre-qualified. Factors like down payment and closing costs may have more of an impact on overall cost than you realize, and a prequalification helps you to set a budget to determine which homes or properties to look at. It gives you more confidence knowing what you can offer, which is appealing in the eyes of a seller.
What’s the first step?
Your starting point is talking with a lender. This process can be initiated by scheduling a meeting in-person at a financial office, over the phone, or online. If you talk directly with a lender to set up an appointment, they can direct you on what financial documents or information to prepare in advance. If you initiate a pre-qualification online, often the form will prompt you to provide that same information and a lender will reach out to review with you in person.
What happens in a pre-qualification meeting?
Think of a pre-qualification meeting as an educational resource for you as a potential borrower. While the result is determining the amount you can borrow based on your finances, you’ll often receive assistance in building a budget, looking at loan programs that fit your needs, and developing a timeline for achieving your home ownership goals. If you are a first-time homebuyer or have limitations on your down payment, the meeting can open your eyes to down payment assistance options and grant programs available to you.
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