Getting Prequalified for a Mortgage
There are many questions when it comes to how one gets a mortgage and how to determine the amount a mortgage could cost; the way to determine this is through a prequalification letter or otherwise known as a preapproval letter. A prequalification letter is a document from a lender that states how much money that person is willing to loan you to buy a home. You can then give the letter to a home seller to show that you are able to finance an offer.
Decide What’s Best for You
Though the preapproval letter isn’t a guaranteed offer, it’s based on several assumptions:
- Credit score
- Proof of assets
- Credit history
- Debt to income ratio (DTI)
- Verification of employment
*Note that this varies by lender
As a result, you should only request this letter when you feel confident that you’ll meet your lender’s criteria. If you don’t, you may either be denied or charged a higher rate.
Once you have this letter, you can show [whoever you buy the house from] that you are both a serious buyer and can finance the home.
Lenders have different processes and may request certain documents. Look around at different lenders to get a better idea of who you want to choose. Only you can decide how much you’re willing to spend on a home.
As you are working through the prequalification process, you may want to ask the lender questions about the kind of documents you may need for the letter and for getting the actual loan as well.
No Need to Commit
The prequalification letter is mainly used for shopping for a home, so you do not need to commit to one specific lender yet. Lenders do not have enough information yet for you to stick with one anyways. Try to have multiple possible lenders so you have diversity amongst your possible routes. Once you have shopped around for homes you may begin to look at the best deals you have from your potential lenders.
When You Receive Your Letter
When you receive your pre-qualification letter, there are several scenarios you may find yourself in:
- You may get prequalified for more than your original budget; this gives you lots of freedom to shop around while maintaining your original budget or possibly taking the higher loan
- You may get prequalified for less than you intended; you may have to speak to the lender and discuss what caused the dip
- You may be declined a prequalification letter, discuss with your lender why you were denied and find out the cause
Once you have your prequalification letter you can begin your dive into a house search that fits your budget and goals. Long Ridge Construction can help you through the process step by step in your search for your forever home. We have three beautiful communities located throughout Pennsylvania featuring semi-custom homes for sale that are ready to be customized for you.