Guide to Homeownership: 3- Getting Pre-Qualified for a Mortgage
Special Homeownership Resources
Before shopping for a home, talk to a lender and get pre-qualified for a mortgage loan. A pre-qualification is a quick process; the lender will take your rough financial information and give you an estimate of what kind of loan you may get.
The lender won’t pull your credit reports in this case, or verify your income or other financial information. This process is just to give you a good idea of what you can reasonably afford. This will tell you which houses you can consider, and if the lender’s estimate is very low, you might reconsider home shopping until your financial situation improves.
If you find a house you are interested in, you can return to your lender for pre-approval. In this case, the lender will check your credit, verify your financial information, and have you fill out a formal application. They’ll submit this to an underwriter who will decide whether or not to approve your application.
This pre-approval makes it faster and easier when you are ready to make an offer on a property. Only when you have found the home you want to buy will you get full approval on your loan. Part of the loan approval process involves evaluating the property to be purchased to ensure that is worth what you are proposing to pay, so pre-approval is the best you can do while you’re still shopping for a home.
If you haven’t completed a “First-Time Homebuyer Education” course from a HUD-approved housing counseling agency, you should do so before you get any farther in the process. This course will help answer many questions you may have and help you qualify for certain programs to help you get a mortgage loan.
By now you may also be working with a real estate agent, and they can help you navigate the borrowing process while you look for a home to buy.
