Everything is scarier when you’re doing it the first time. With a big purchase like your first home, things become even scarier since this may be the only time you make such a purchase. You want to get it right. Learning about the process and getting prequalified for a home loan can put you in the driver’s seat, so you’ll feel confident every step of the way.
That first step – prequalification – isn’t as daunting as it seems. That’s great news for anyone thinking about buying a home.
Tips for getting prequalified for a home loan
Getting prequalified for a home loan doesn’t have to be scary. In many ways, it is just a warm-up for the home buying process. If you’re ready to buy, this will only give you proof and confidence to move forward. If you’re not sure if you’re ready, a prequalification can put you in place to know for sure how prepared you are.
Prequalification doesn’t even require a hard credit check, so your primary job in the prequalification process is as simple as making sure your information is accurate. You don’t want any surprises down the road when looking for a preapproval from a bank. Gather the following information and make sure it is correct:
- Your income
- Assets for downpayment
- Credit score
- Desired loan term
You may not need all of these for your prequalification, but knowing the information will give you the most accurate estimation of what the path forward will look like for you.
Never alter any of this information to give yourself a favorable prequalification. Even if you have some change coming to your income or assets you believe you can count on, don’t include that in your prequalification until it has come to fruition. Providing inaccurate information may not ruin your chances of prequalification, but it will give you an unreliable result that can hurt you down the road.
Benefits associated with getting prequalified for a home loan
As we said, a prequalification is often that first step to making your home purchase a reality. It’s the difference between browsing homes online that you wish you could buy and making real appointments with sellers and showing them you are serious about the process.
A prequalification makes a difference in your home-buying process by:
- Providing an estimate of how large of a loan you may get.
- Giving you clarity about the terms you can expect.
- Showing a seller you are serious about buying.
- Letting you know if you are ready to get into the home you’re hoping for.
More than anything, the prequalification process should be giving you a better picture of the reality of your situation. If you need to work towards earning a higher income or adjust the size of the home you are looking to get into, you’ll know how to adjust after the prequalification process. This is another reason you should never provide inaccurate information. If this is meant to give you a picture of the reality of your lending situation, you don’t want that picture distorted in any way.
Is there anything you have found confusing about the home loan approval process?