Pre-qualifying for a Mortgage

It May seem obvious, but as today's current economic climate has shown, before buying a home, you need to establish your capacity to afford such a purchase. It’s a good idea to calculate the price of the home you can afford by making an assessment of your financial situation. While everyone's situation is different, this would include an examination of your monthly income, current saving, and future expenses and so on. It is also a good idea to use a pre-qualification mortgage calculator to determine the size of the mortgage loan you may wish to apply for or unltimately need.

After that, the search for a local or a national mortgage lender begins and you can check if you pre-qualify for a mortgage. With the help of your financial information the lender can determine the best mortgage for you and your needs. Pre-qualification is an assurance by the lender given in the form of a letter or a certificate specifying the maximum amount of loan for which you can qualify. This is accomplished after going through your credit history, property appraisal, verification of your income and job evaluation. The lender helps you assess the right price range for a mortgage loan without actually having to offer you a loan. Some pre-qualification assessments even help you evaluate your credit history.Pre-qualification does not usually carry a fee and it is often a good idea to pre-qualify before you send in an application for a home loan. There are four reasons for pre-qualification: 

 1) you can save quite a bit of money (thousands, really) when you are negotiating with a property seller after pre-qualifying;

2) buyers who are pre-qualified are given preference over others in multiple offer situations;

 3) pre-qualification is a must in order to get real estate agents to work with you; and,

4) pre-qualification will also help you apply for a loan located in the right price range. A lender may give you a pre-qualification letter but neither of you are compelled to do business with the other. Helping you pre-qualify gives the lender an opportunity to advertise his services.