Get pre-qualified for a mortgage

Getting Prequalified for a Mortgage: Everything You Need to Know

When you decide that it is time to buy a home, the process can feel… overwhelming to say the least. Between searching for a home, applying for mortgages, and completing the long list of tasks to become a homeowner, it is easy to feel like you could use a little help.

If you feel this way, you are not alone. There are millions of Americans entering the housing market right now, and many of them are trying to navigate this complicated process.

At Bates Homes, we think finding and buying your new home should be an exciting, rewarding experience, and, of course, fun.

One of the first things any prospective homebuyer should do is try to get prequalified for their mortgage. In short, this process helps speed up your home buying experience by telling lenders that you are a quality candidate who should be approved for your loan.

But how do you get prequalified? Here are the answers to all your prequalification questions.

What is Pre-qualification?

Let’s start simple: what exactly is prequalification? Simply, this is a way for lenders to confirm that you are a responsible applicant who should be seriously considered for a mortgage loan. This information can make lenders move more quickly to grant approval, thereby making the home buying process faster.

But prequalification is not just for the lender’s benefit. This process also gives you valuable information — namely, just how much you may eventually qualify to borrow. This can help you narrow down your home search so you can find a home that meets your needs and fits in your budget. In other words, prequalification is a win-win for both buyer and lender.

Do I Need to Get Prequalified?

Not always. However, most production homebuilders do require a prequalification letter in order to reserve a home. This demonstrates your interest in purchasing. In some case, where the market is more competitive, this can help you secure a position on a priority list making it easier for you to buy.

Getting prequalified can also provide more clarity on the full financial picture of affording a home, including closing costs, property taxes, and other expenses. Prequalification can give you cold, hard numbers that you can use to assess whether you are ready to jump into the housing market.

It is also a free process, so there is no real harm in speaking with a lender to confirm your potential mortgage amount.

Is Pre-qualification Different from a Pre-approval?

Yes. When you get prequalified for a mortgage, lenders give you an estimate of how much they think they would approve for your application. The process is not hugely detailed (for example, it does not require a credit check), and for this reason it is considered more of a guideline than a promise of approval. Remember, getting prequalified for a mortgage loan DOES NOT GUARANTEE that you will actually be approved.

By contrast, preapproval is a much more involved process. During preapproval, a lender will run your credit score, look at your financial history, and use that information to assess your eligibility for a loan. Preapprovals typically provide you with a more accurate price range (and they do tend to impress sellers during the offering stage), but they do require an up-front fee and can negatively affect your credit score in the short term.

How Do I Get Prequalified?

If you are ready start the home buying process or just thinking about it, you will be happy to know that getting prequalified for a mortgage is actually quite simple. In fact, you can complete the process in just a few phone calls — provided you follow these simple steps.

Step One: Call One of Our Preferred Lenders

Bates Homes’ preferred lenders have been working with our homebuyers for years. They know the process and are always ready to provide information and support.  Remember the prequalification process is both informal and free — and that means there is no harm in jumping right in.

Step Two: Gather a Few Pieces of Financial Information

Your prospective mortgage lender will need some information from you to determine whether you can receive a loan (or how big a loan you can receive). Therefore, it is best to collect the following information before you attempt to get prequalified:

  • Your legal name and contact information
  • Your credit score
  • Proof of employment and income
  • Information on current debts
  • The zip code where you hope to buy a home

Step Three: Answer Their Pre-qualification Questions

When you call a lender for prequalification, he or she will ask you several questions about your current finances, income, credit score, and home-buying plans — in other words, everything you gathered together in step two. Now, you have the simple task of relaying this information to each lender and clarifying any questions they may have.

Step Four: Get Your Letter

Now comes the fun part: getting your prequalification letter from your lender. Use this information to shape your homeshopping decisions and get ready to find the home that not only fits your lifestyle, but your pocketbook too.

While you are looking for your first home, forever home, or second home, please check out the beautiful properties available at Bates Homes. Contact our sales team to learn more today.