The First Step In The Mortgage Pre Approval Process
Why the first step? Don’t be fooled, a “mortgage pre-qual” or “mortgage pre-qualification” is not an approval. It’s not even a pre-approval. To prequalify for mortgage you simply calculate how much mortgage you can afford based on your income.
Type your annual income into our online calculator and you will receive the answer. This is how much mortgage you will qualify for based on the income that you say you make.
Now, if you want to actually go shopping for a home and be confident that you will qualify, then you need to go through the mortgage pre approval process.
Try our Mortgage Pre-Approval Calculator and find out how much mortgage you qualify for…
Pre-Qualify for Mortgage, 5 Steps:
- Complete a mortgage application
- Review your personal details with a mortgage professional
- Provide some documents to confirm your income (employment letter & pay stub)
- Review your credit
- Receive a Mortgage Pre Approval
Do you need to go through this process to prequalify for a mortgage?
No, not always. If you already own a home, you may not need to. If you have a large down payment, you may not need to go through the process to prequalify for the mortgage.
For most people, it can be very helpful to prequalify for a mortgage and go through the 5 steps described above.
Tom saved thousand because he first decided to prequalify for mortgage before he bought a home…
Let me give you an example. Tom owned his home. His home had gone up in value substantially since he first purchased it. After he sold, paid real estate fees and the existing mortgage, he would have almost $200,000 cash for the purchase of his new home.
Tom didn’t really think it was necessary to get pre approved to purchase a new home but did it anyway. During our review of his existing mortgage, we found that there would be a penalty to pay it off when he sold. In fact, the penalty was big. Almost $15,000.
Tom had 2 options:
- He could keep the mortgage and PORT it to the new home when he purchased it.
- He could pay out the mortgage, pay the penalty and get a new mortgage
The interest rate that he had was much higher than was available today so he didn’t like option 1. The penalty was big, so he didn’t like options 2!
I suggested a third option. Tom’s current mortgage lender will allow him to make 2 large lump sum payments toward the principle of his mortgage over the next 4 months.
Tom doesn’t have the cash to do this, but he could arrange a Home Equity Line of Credit now. He could then use the Home Equity Line of Credit to make the 2 large lump sum payments against the existing mortgage. These payments will reduce his penalty by more than 40%. That’s more than $6,000 in savings.
We start the process and help Tom pay down his existing mortgage. He wasn’t in a big hurry to purchase another home and this way he saves thousands because he decided to prequalify for mortgage before finding a home he couldn’t live without.
Bridget and Oscar decided to prequalify for mortgage and found out they had to fix their credit before they started shopping for a home…
Bridget and Oscar had been saving to purchase a home for a number of years. They both had good jobs and could afford payments much higher than they were willing to spend. They went online and used the calculators to see that they prequalify for mortgage of almost $500,000. They only want to buy a home for $350,000.
They plan to purchase a home in 9 months. We decided to go through the 5 step mortgage pre approval process. When we checked Bridget’s credit, we found an issue. She had a credit card that hadn’t been paid for 4 months. The balance was only $10 but no payments had been made. Bridget’s credit wasn’t good enough to qualify for a mortgage. Luckily, they checked her credit early. They had time to fix the issue. In fact, Bridget thought she had paid the credit card.
Bridget was able to have her bank help her. She paid the credit card right away. After 4 months, her credit had improved substantially and now they qualify to buy a home.
Are you looking to purchase a home? Do you qualify for mortgage? Try our online calculator and take the first step.