PREQUALIFICATION

You can ‘pre-qualify’ for a loan before formally applying for a loan. The lender gathers information from you about your income and debts and makes a preliminary financial determination about how much house you may be able to afford. Usually, a prequalification letter is issued showing the amount for which the lender has pre-qualified you.

Please understand that the lender will take the information that you give about your income, assets and debts in order to pre-qualify you. The pre-qualification is only as good as the information that you give, and is subject to the lender’s verification of that information during the formal application process.

It's a good idea to know how expensive a home you can afford before you start shopping for one, and a pre-qualification from a lender can help. If you can provide a pre-qualification letter, sales agents and sellers will know that you are an able buyer and may take your offer more seriously. A pre-qualification letter may sway a home seller to negotiate with you as opposed to another buyer who is not pre-qualified. If you are refinancing the loan on your existing home, then the prequalification process should help you decide whether refinancing is a good idea for you.

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