Mortgage prequalification refers to the ability or the amount of loan that an individual or a company stand to qualify. This is usually based on the primary information provided that covers the financial income of the person or company, the assets in possession and the total credit check of the entity or individual, preferably within a period of two years.
The process of prequalifying for a mortgage is necessary as it enables an individual, for instance, to know the total estimate of his or her borrowing power. This, therefore, helps him or her be in a position to know what they stand to get based on their worth. In most cases, a majority of the individuals get disqualified from getting the mortgage because they often do not stand to prove their worth regarding the income and assets that they have in possession. This has often led to them qualifying for a lower mortgage loan, if not missing the whole deal.
Prequalifying For A Mortgage Task
The process of mortgage prequalification is one that requires a straightforward approach, as an individual has to decide who the best mortgage lender is even before choosing to visit them. Upon making the visit, he or she has to produce sound evidence that shows that the assets, as well as other property under their disposal, have significant financial value to warrant security for the mortgage being applied for. The lenders will then use their best judgment to determine the financing potential of the individual before sealing the deal.
Top Misconceptions Revealed
To begin with, a majority of people do not prepare well during the process of prequalifying for a mortgage. They take the process with less seriousness without considering the drawbacks that they suffer at the end, only to realize that the most important step toward crossing the bridge of mortgage success is passing the prequalification stage. For instance, an individual may easily walk through the door of a mortgage lender with the intention of securing the mortgage but instead, hide crucial information.
Most of these people do not reveal the total income they get monthly, the assets they possess, and their credit worth. This, in turn, makes the lender make a premature judgment about their credit worth, hence hindering them from securing a mortgage. Some may also think that it is cheap to fudge a little and will go as far as promise what they don’t have. Unknown to them, they naturally reduce their chances of prequalifying for a mortgage.
Secondly, most people do not do their homework properly. They do not research about the lender. They take things lightly and are therefore punished for their lack of basic knowledge about the lender. It is important to do research about the lender for a good research helps you categorize the lenders under different levels of qualifications and experience in the industry.
This will help you know exactly who to approach. The process of prequalifying for a mortgage also requires you to know the kind of ratings and reviews offered by the lender. Some lenders may have high rates and reviews, and this can only be determined through doing a thorough research about the lender.
Misjudgment of The Stage
Thirdly, the prequalification stage is often confused for an approval process for the mortgage. Most people fall into this trap not bearing in mind that prequalifying for a mortgage process is just a stage of determining the financial power of an individual or a company to finance the mortgage.
At this point, the lender scrutinizes the potential of his or her client through gathering evidence by proving that the property and assets belong to them. Due to this misconception, a good percentage of those who stand to win the mortgage lose due to lack of information as a result of bloated expectations.
Wrong Opinion on Credit Score
Lastly, there is a misconception that prequalifying for a mortgage requires you to have a higher credit score. Most mortgage lenders do require an individual to have a good credit, but it’s not true that you must necessarily have a higher credit score. Such companies only require you to have a good history of credit improvement. This often makes people work hard to impress the lender with a view of getting undue consideration for a mortgage.
Remember, you simply need to check whether an individual has been making a positive gradual improvement regarding credit worth. It should, therefore, be clearly stressed that not everyone with poor credit score will be approved and prequalified for a mortgage.