Getting Prequalified

Written by Charlotte Wood (last updated February 21, 2009)

It's always exciting when you find that perfect house and you want to draw up the mortgage papers right away, however that whole bit about having to actually be qualified can be a roadblock. It doesn't have to be a stumbling point however if you know what to look for and what's important when qualifying for a loan.

You need to make sure you prequalify before the house hunt because then you'll really know what your price range is and what you can look at. To prequalify doesn't mean to start taking out a loan; it's simply to determine if you can afford to take out a loan and if you do qualify, how much you can afford.

When lenders look to see if you prequalify for a loan, they look at a few different things: your credit history, what size of mortgage you actually can qualify for, and the money you have to put down for a down payment and closing costs. All three of these factors go into determining your eligibility for a loan. When talking with a lender or broker you need to be completely honest about your financial situation because if you're not then it will come back to bite you later and you could be left with an unfortunate and sticky state of affairs. You'll need to provide information on any other outstanding debts you have, your gross income, any other financial obligations like child support or alimony, and the amount of cash you can initially put down.

Once you're prequalified you can then rest your anxieties a little bit because it's already been established that you can afford to get the loan. Don't mistake that, however, for actual approval; that comes later when you're actually applying for the loan. To ensure a better chance at getting prequalified you can make sure your FICO scores and ratios are up to par. If you have a credit score (FICO score) of around 680 or above and a debt ratio of 35 percent and below then you're in good shape from the lender's perspective.

While a prequalification isn't a guarantee of a loan, it is the first necessary step toward owning your own home. So just make sure your numbers are as good as they can be and you're honest about your situation and you should have no problem prequalifying for that loan that will get you into the home you want!

Author Bio

Charlotte Wood

MORE FROM CHARLOTTE

Electrolysis Made Easy

There are many ways to dispose of unsightly hair, the most common being waxing and plucking, but for some that just isn't ...

Discover More

Using Sunless Tanning Lotions

Summertime is here and you want to be tan! If you don't tan easily or want to avoid the negative effects of UV rays, you ...

Discover More

Finding Tax Forms

The frustrating aspects of filing taxes is never alleviated by the fact that sometimes those tax forms you need are so ...

Discover More
More Money Tips

Refinancing Your Mortgage

Whether you are looking to refinance to move from an adjustable rate mortgage to a fixed rate, or are trying to reduce ...

Discover More

Reducing Your Mortgage

Reducing your mortgage may seem difficult, but if you know the right ways to go about it, then you can meet with pleasing ...

Discover More

What about Interest-Only Loan Options?

What are they, and are they good for you? Brace yourself; you're about to find out.

Discover More
Comments

If you would like to add an image to your comment (not an avatar, but an image to help in making the point of your comment), include the characters [{fig}] (all 7 characters, in the sequence shown) in your comment text. You’ll be prompted to upload your image when you submit the comment. Maximum image size is 6Mpixels. Images larger than 600px wide or 1000px tall will be reduced. Up to three images may be included in a comment. All images are subject to review. Commenting privileges may be curtailed if inappropriate images are posted.

What is nine minus 1?

There are currently no comments for this tip. (Be the first to leave your comment—just use the simple form above!)