The seven major benefits of getting mortgage pre-qualification
Applying for a mortgage pre-qualification is the first step in getting a home loan. Basically, you just give a lender or mortgage professional your name, phone number, and some basic information and they will give you a general idea of how much you can borrow. It’s simple. Yet the benefits can be very helpful.
There are at least seven major benefits to going through the mortgage pre-qualification process. And the first reason to begin the mortgage pre-qualification route is speed.
It should only take 15 minutes or less to complete a mortgage pre-qualification application. That’s it. But if you choose to do the whole loan application first, that could take up to an hour to fill out. And if the lender needs all the documents to make a decision that could take a lot more time. Within a few minutes of completing a mortgage pre-qualification application you can know the basic limit of the mortgage loan amount and the range of the monthly payments.
Benefit number two is the loan amount limit. Mortgage pre-qualification will give you the ball park range of home loan you can receive, therefore helping you target the range of houses to search. This information can save you days and even weeks looking at the wrong type of houses.
Benefit number three is the approximate monthly payment. The advantages of knowing this information can help in many ways. It is definitely nice to know for monthly budgeting purposes. It also can help determine what range of payment would fit into your life style. The standard percentage of housing cost may not be right for your life style. Just because the lender says they will lend up to 45% of your month income you many only want to dedicate 33% to housing.
I am a firm believer in individual prospective. You know what you want out of life. You are the best judge of what is good for you. Even if a lender will give you more money you many not want that much debt or monthly obligations. Mortgage pre-qualification gives you the number to make the best plan for your life.
Mortgage pre-qualification gives you another set of numbers. Benefit number four is the ratios. Lenders use the monthly payment on a property to determine a borrower’s qualifications. The payment includes principal, interest, property taxes, and insurance—commonly referred to as PITI. This income ratio is based just on the housing cost.
Lenders must also take into account the borrower’s long term debts. The total monthly expenses are divided by the borrower’s gross monthly income, which results in another ratio, called the over-all ratio. With the two ratios understood, the lender can tell for what loan amount you qualify.
This brings us to benefit number five. Now that the lender or mortgage professional knows the ratios they can determine what types of loans are available to you. I know it sounds like the alphabet, but each loan type has its own benefits and problems. Mortgages have many types of loans such as VA, FHA, Conventional, USDA, jumbo, Cal Vet and many more. By getting a mortgage pre-qualification you have time to work through the list to choose which is best for you.
This leads to the sixth benefit. Time to get the loan can be very critical. By getting a mortgage pre-qualification early you can work through the loan process with enough time. Some people have lost the home they wanted because the seller could not wait the time it took to get the loan. You can also save money by working with a lender that may have low fees, but take a long time to process the loan.
The last benefit, number seven, may not sound good but it could really help. The mortgage pre-qualification process could tell if you qualify for a mortgage. If the answer is no, you now have time to fix it. Sometimes credit reports show wrong information that can easily be fixed. Other times, there is a major problem that can take months to work out.
Finding this out early is extremely beneficial to you. Time is your friend if it is early in the house searching process. Time will kill a deal if it is near the end of a deal.
Mortgage pre-qualification is fast, almost painless and helpful to you. Even if you are a year away from wanting to move into a new home, start the process now and reap the benefits.
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For more information about mortgage prequalification check out HousingSacramento Loan pages.
Mortgage prequalification will give you the ball park range of home loan you can receive therefore helping you target the range of houses to search. Click to start a fast and easy prequalification application.