Getting Prequalified

Before you start your search, you should know what you can afford to buy. An experienced Realtor like Tauber Real Estate Services can help you find lenders to see what size mortgage you qualify for. “Prequalification” does not cost you anything. It is simply a conversation with a lender where you provide your financial information and the lender, in turn, gives you an estimate of what size loan he or she believes you would qualify for if all the information you have provided is accurate. Often a lender will give you a letter summarizing the conversation. Being prequalified does not mean your loan has been approved. Prequalification is only a determination of your probable credit. You will still have to go through the formal application and approval process, which includes a thorough credit check, among other things, after you have a contract to buy a home. Some lenders will “pre-approve” you for a loan before you start your home search, but that takes longer, still involves the formal application and approval process, and will cost you money. To “prequalify” you, a lender will want to know:

  • Your annual income
  • The amount of cash you have for a down payment
  • Your current home loan
  • Your credit card balances
  • Other loan balances (auto, boat, school)
  • Other factors affecting your income (child support, alimony, tax payments, dividends, bonuses)

So you should collect that information before you contact a lender. It is generally a good idea to be prequalified. Many sellers require a prequalification letter with your offer to purchase. Even if they don’t, a prequalification letter makes your offer look stronger.