Mortgage Information from HUD
Mortgage Planning Help
Home Buyer's Guide Step 3
Pre-Qualification and
Pre-Approval
Mortgage pre-qualification and pre-approvals can help first-time home buyers plan their house search wisely. Before you search for a house, you should understand exactly how much house you afford and plan for your mortgage agreement.
What is Home Loan or Mortgage Pre-Qualification?
- A pre-qualification is an estimate of how much you can afford in a long-term and monthly mortgage payment.
- During the pre-qualification process, your real estate agent or another advisor analyzes your finances by looking at your income and debt ratios and other basic financial information.
- They calculate an estimate of how much mortgage you can afford.
Pre-Qualification Can Save You Time and Money
- Understanding your most likely mortgage plan can help you set a budget—and save you time by focusing your home search on properties that are within your financial reach.
- Mortgage pre-qualification can also increase your bargaining and negotiating power; the sellers know that you are prepared to close the deal more quickly.
- They calculate an estimate of how much mortgage you can afford.
Pre-Approval Letters Are a Home Buyer's Advantage:
- Take your preparation even further with a mortgage pre-approval. A mortgage pre-approval is a firmer commitment on behalf of the mortgage company.
- The process results in a pre-approval letter, which stands as proof of your ability to borrow the required amount of money.
- Mortgage pre-approval puts you in an even stronger position to make a serious offer when you find the right house.
NEXT STEP: Search and Visit Houses
- Get the most out of your home buying search!
- Learn expert tips on how your agent should help.
