Obtaining a mortgage prequalification is a less-involved process. You’ll offer your name, income, employment status and get a budget range of how much a lender is likely to give you. The lender isn’t actually verifying any of that financial information. It’s a place to start and it can give you an idea of what homes you can look at in a range where you’re liable to get a mortgage. That can be helpful to target your search. Remember, it doesn’t carry the same weight as a mortgage preapproval would. With a mortgage preapproval, the lender has done all their due diligence to ensure that the information you’re providing is accurate.
How Do I Prequalify For a Home Loan?
Shop your around to make sure you’re getting the best mortgage deal. Compare lenders by the interest rate they offer, the terms--such as how many years it will take to pay off your mortgage and if there are any prepayment penalties. Prequalifying for a loan is not as airtight as getting a mortgage preapproval. Even though the preapproval isn’t assurance of a mortgage, pending the final review just before you sign the mortgage papers, it holds far more weight than just prequalifying. It’s a process that your real estate agent is likely to suggest since they prefer to work with a buyer who is serious.
Preapproval for a home loan involves a review of your finances. The lender will ask for detailed information that includes your income, employment history and employer contact information, debts you owe, bank and investment account statements, tax returns, pay stubs, identification such as your driver’s license and Social Security number and potentially other financial details. The paperwork may seem daunting, just remember that you’d eventually have to do it anyway. A home loan preapproval takes you are one step closer to making home ownership a reality.
Create A Must-Haves And Deal-Breakers Checklist
Take inventory of what you will need in your new home. A list of must-haves and a list of deal-breakers can help you determine the right place for you. Keeping detailed notes throughout your home search will help you make better choices for your future. A home tour checklist ensures a property is checking all the important boxes, like the number of bedrooms and baths. It can also eliminate a home from the consideration that has too many deal-breakers.
Remember, the checklist is a tool to keep you focused on the priorities. A home might have a few issues here and there. But many minor repairs or aesthetic issues can be changed once the home is yours. Superficial items like paint color, wallpaper or textures, popcorn ceiling, etc. can be changed. Don't let small repair items take away from the bigger picture of getting a home you will love.
Below are some ideas you may want to include in your checklist. Share your findings with your real estate agent to make sure they know which homes are hitting the mark and which ones are falling short:
Number of bedrooms
Number of baths
Storage space
Yard/patio
Energy efficiency
Neighborhood safety
Nearby businesses
Commute
School ratings