What You Need to Know About Pre-Qualification

The best thing someone can do for their future is to prepare for it now, and this holds especially true for the aspiring homeowner who needs to lay the foundation for buying the home of their dreams.

Something that many first-time home buyers fail to realize is that ˜pre-qualification' and ˜pre-approval' are two different things, and many buyers are lulled into the belief that if you are pre-qualified for a mortgage, then you are pre-approved as well. That simply isn't the case. There is a huge difference between the two terms, and you should know exactly what it means to be pre-qualified before beginning your home buying process.

Getting Pre-Qualified

Pre-qualification is the first step on the road to acquiring a mortgage and is typically very straightforward. To start the process, you will need to supply a bank or lender with information that gives them an idea of your overall financial picture. Things like your debt, income, and assets are all taken into consideration. After looking over your information, your lender will be able to give you an idea of the amount for which you qualify. Pre-qualification can be done via phone call or online typically, and it is usually free.

Pre-qualification is a great tool that allows you to analyze the goals or needs you have with regards to purchasing a home with your lender. With that information, your lender is better able to explain the various mortgage options that are best suited to you.

Because being pre-qualified is only a rough estimate based on information that you provide, that amount and the amount you are pre-approved for can be very different as the criteria for being pre-approved is much more thorough.  In order to be pre-approved, you would need to provide your lender with supporting documentation to back up the numbers you originally gave them.  For example, to verify your income, you would typically provide recent paystubs along with W2's and tax returns from the past two years.  To verify assets, you would provide bank statements from all accounts for the past two months.

If you're buying a home for the first time, don't underestimate the importance of a pre-qualification. When the time comes to purchase the home of your dreams, look no further than Butler Mortgage to help. With decades of experience under our belts, we can help you find the perfect mortgage for your needs and qualifications. For questions, or to speak with one of our representatives, call us today at 407-931-3800.