Hi. It’s Kirk Brewer, the Loan Geek here with another Mortgage Tip of the Week. This week I want to talk to you guys about PRE-QUALIFICATIONS. I believe this week’s tip may be one of the most important tips I have for you. So I hope you get a lot of value out of it.
In this week’s tip, I’m going to talk to you about what is a pre-qualification, why you need to get pre-qualified and when you should go through the pre-qualification process.
What is a pre-qualification? Well, as the name would imply, it is a review of your specific financial situation relative to the guidelines and rules of various loan programs before you start looking at homes to make sure that you qualify.
Various loan programs have rules for income, assets, debt-to-income ratios, credit and various other factors that you need to meet to be able to qualify.
A good pre-qualification, performed by a home loan expert, will thoroughly review your situation, verify your situation with the proper documentation and make sure that you qualify for the various loan programs that you may be interested in.
Why should you get pre-qualified? Well, at the most fundamental level, you don’t want to go out looking at homes and putting offers in on homes if you don’t qualify buy them. It’s a waste of your time, the real estate agent’s time and the seller’s time. You need to know, if you are qualified and for how much you’re qualified. You don’t want to be looking at half a million dollar homes if you qualify for $300,000 or million dollar homes if you qualify for $600,000.
So that’s one of the big reasons why you should get pre-qualified. The other big reason is simply because it’s very rare that a seller will accept an offer to purchase their home if that offer is not accompanied by a bona fide pre-approval or pre-qualification letter from a reputable mortgage lender.
So if you want your offer to be accepted, you better be pre-qualified beforehand.
So the final question is, “When should you get prequalified?” Well, obviously it’s a PRE-qualification. So you should get pre-qualified BEFORE you put in offers on homes.
However, quite frankly as I tell all of my clients, it’s never too early to get pre-qualified. The pre-qualification process is so important! It is the very first step in the entire home-buying process and so even if you think it’s six months out or maybe even a year out before you want to start looking at homes, but you know you want to become a homeowner, then it’s not too early to get pre-qualified.
If your qualifications are smooth and everything is super clean, that’s great. You’ve got the peace of mind of knowing you’re qualified and if nothing changes between the time your pre-qualification was done and when you’re ready to put in an offer on a home, then that’s wonderful.
However, if there are some issues with your ability to qualify, maybe you qualify but not as strongly as you could or maybe you don’t qualify at all at the time we’re doing your pre-qualification, we can identify those issues that are creating challenges, identify them early on in the process and that way we have plenty of time to get those issues addressed, create a plan and either get you qualified or improve your qualification long before you start looking at homes.
So there you have it. We’ve covered it at a very high level view here for the purposes of this tip of the week.
The one thing I would like to stress for you is not all pre-qualifications are created equal. Some are better than others. Again this is why I believe the pre-qualification process is the most important step in the entire home-buying process. If it’s done right, it’s done thoroughly, all of the heavy lifting is done upfront, so that once you actually get an offer accepted on a home and you officially enter the home loan purchase process, it should be smooth, uneventful, no surprises. Because no stones were left unturned during the pre-qualification process, the actual home loan process can be smooth and stress-free.
If you have any questions on the pre-qualification process or any other mortgage-related questions, feel free to reach out to me directly. Or you can go to our website www.LoanGeeks.com. All of our contact information is out there. We are Loan Geeks . . . your full service, low rate mortgage experts.
Talk to you soon. Take care. Bye now.
Kirk Brewer
Branch Manager | Loan Geek | NMLS #150287