How to Prequalify for a Home Loan

How to Prequalify for a Home Loanby Somerset Mortgage Lenders: "The Brains, The Courage and The Heart to Make Your Dreams Come True"

Somerset Mortgage Lenders and Gregg Marcus strive to keep the public educated with tips and tricks meant to make getting your loan as easy as possible. To this end, they have put together this brief explanation of the steps you must take to be prequalified for a loan.

To be pre-qualified for a loan means that a lender has done a preliminary review of your basic information and, without confirming any of it for validity nor checking to see if there’s any significant information you’ve withheld that could further affect your creditworthiness, has determined that, based on their standards, you would qualify for a loan up to a specific dollar amount should you apply with them.

Being pre-qualified does not mean that you are pre-approved. Pre-approval is a commitment to approve you for that loan, should all the information you’ve provided be accurate and complete, whereas pre-qualification just means that, according to their standards, you look to qualify for said loan amount.

Getting pre-qualified has several advantages, read the following:

1.) Pre-qualification lets you know how much you can actually afford on a home, which helps tremendously in focusing what could otherwise be an overwhelming house-hunting experience.
2.) Pre-qualification demonstrates to sellers that you are serious buyer who is ready, willing, and able to follow through on an offer.
3.) pre-qualification helps the whole mortgage application process to go through much faster, as a great deal of the information you need to provide is already in the lender’s possession.

Another advantage of pre-qualification is that pre-qualified borrowers can usually lock-in their interest rate, a huge benefit when you consider how much interest rates can rise between the time you start your search for a home, the time you complete your loan application process, and the time you close on the house. There may be a lock-in fee, but if it’s reasonable, it’s usually worth it. Locked-in rates are usually valid for 30-90 days, depending on the lender.

When trying to lock-in an interest rate, ask whether the lender has a "float down" feature. This allows you to lower your interest rate once, if prevailing rates go down during your lock-in period, preventing you from getting stuck with a higher interest rate than if you hadn’t locked it down at all.

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