The Why and How of Getting Prequalified

2007-03-08 10:33:40

( Business )



The Advantages of Getting Prequalified

When you're buying a home in a fast-moving market environment like California, you need to act fast so that you don't miss out the opportunity to buy the home that you really like.

One of the things you could do is to get prequalified for a loan. Getting prequalified will give you a rough idea of how much you will be able to borrow, and what type of mortage package you can avail of.

Knowing your credit limitations can help you formulate a basic budget as to how much will be the maximum home price you can afford. Prequalification can also lead you to the best lenders.

You need to follow a few simple steps to get prequalified.

Procedures for Getting Prequalified

You will need a referral from a friend, co-worker or real estate agency. You need to provide information about your income, outstanding loans and credit card facilities you are currently paying for, and other liabilities such as rentals and child support.

You also give your lender an authorization to acquire a report of your credit history. You can also secure this credit report online by providing information about your work history, salary, age, credit lines, and any deregatory information such as bankruptcy, and then paying a small fee.

The credit report will show your credit score, which is computed by a reliable and qualified intermediary called the credit agency. A high credit score means that you will be able to enjoy better loan terms.

With all this information, you can now ask a lender to prepare the letter of prequalification, which specifically states that you have acceptable credit information. You can submit this letter to the home seller along with your written offer. You may even obtain several prequalification letters from different lenders.

Prequalified vs. Preapproved

"Preapproved" is definitely much better than "prequalified". It means that the lender is ready to extend you the necessary funds anytime you need them to buy the property. You do have to undergo the usual credit checking procedure with your lender. But if you do this in a timely and organized manner, and work very closely with your lender, you can get a preapproved loan at the soonest time.

Having a preapproved loan will help you close the sale quickly and move into your dream home sooner.


All rights Reserved © Tradenet Services srl
Do not duplicate or redistribute in any form.