If you’re planning on searching for a home in Southern California many people will tell you to get pre-qualified for a mortgage loan but sadly few people really know what this term actually means.
In today’s post we will break down mortgage pre-qualification and what this means to you before you start your home search.
How Mortgage Loan Pre-Qualification Works
Mortgage loan pre-qualification means that a lender will take a “higher level” look at your income, debts and assets then tell you exactly how much of a mortgage loan you qualify for. This process is typically quick and can be done over the phone or internet but the truth is that mortgage loan pre-qualification isn’t the same as getting pre-approved for a mortgage loan.
Why Pre-Approval Is Important
Since mortgage loan pre-qualification is only a “higher-level” view of your finances, a lender will take a more in-depth look at your finances during the pre-approval process including reviewing the following information:
- Your credit history
- Debt to income ratio
- Income sources
- Job history
Once you’ve been pre-approved for a mortgage loan amount you will receive a loan commitment lender from your mortgage lender which will tell you the exact mortgage loan amount that you qualify for and the exact date that your lender is expected to lend the money to you so it’s always best for you to make sure that you don’t have an early commitment date on your Real Estate contract.
What to Do Before Getting Pre-Approved
As a home buyer one of the best things you can do before you get pre-approved for a mortgage is to check your credit history by getting your 3-in-1 credit report because this will tell you if you have any negative or inaccurate items on your credit history that you should change before going through the pre-approval process.
Besides working on your credit you should also lower your debt-to-income ratio by paying off recurring debts (if possible) and if you have student loans you should consider deferring your student loans for 12 months because in some cases lenders will not count your deferred student against you.
Learn More about Mortgage Loan Pre-Qualification
To learn more about mortgage loan pre-qualification vs. pre-approval contact Fred Sed and Associates today by calling us at (800) 921-9231 or connect with us online