Getting the ‘green light’: Just like you wouldn’t dive into a pool without knowing how deep it is, you wouldn’t want to house hunt without knowing how much you could afford. That’s why once you have decided buying a home is your best option and you’ve examined what your finances will allow, it’s a good time to talk with your PrimeLending Loan Officer about being prequalified or preapproved.
Prequalified In a prequalification letter, the lender has been provided the buyer’s financial details and, based on verification of these details, agrees to give a loan to the buyer. A credit report is not required at this point.
Why Bother? Knowing how excited many homebuyers can be, it can seem frustrating to add a step before the house hunt. However, there are several advantages to being prequalified/preapproved that can make it worthwhile.
• Credit challenges or problems that might prevent qualification are discovered and addressed early in the process.
• You will be able to house hunt with confidence knowing that the financial backing that is available to you.
• Home sellers typically see more strength in offers from prequalified buyers.
• For self-employed or commission-based buyers, a prequalification letter can demonstrate financial backing for buyers whose incomes may fluctuate more than those of salaried buyers and therefore possibly demonstrate more risk.
• Prequalification letters show that the lender is willing to move forward with the loan for first-time homebuyers even though they may lack a credit history that demonstrates their ability to make monthly mortgage payments. It helps equalize their offer with similar offers made by previous homeowners.
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