Getting Prequalified

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

Picking a Great Foundation

Foundation is the base of makeup application, so you need to know how to pick the right one. If you don't have the right ...

Discover More

Classic Women's Shoes

While women are known for having a plethora of shoes, a woman doesn't really need 50 pairs to fit her basic needs. Here ...

Discover More

What Makes a Good Investment?

Good investments are often hard to figure out; it's hard to decide what's good and what's bad and what will best benefit ...

Discover More
More Money Tips

What Are Subprime Mortgages?

A subprime mortgage is the type of mortgage given to borrowers with credit scores below 620. You can avoid the high fees ...

Discover More

Building Home Equity

While you may know that high home equity is a good thing, you may not know how to go about building that high equity. The ...

Discover More

Understanding Closing Costs

Unfortunately there is more to buying a house than just paying the list price. You need to factor in closing costs and ...

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}] 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 more than 2?

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