Today we’re going to be talking about “How can I figure out if I qualify for a mortgage?” Part II. Today’s focus is more on pre-qualification and pre-approvals and I just wanted to let you know that there’s a lot of lingo and no standard definition for each of these things, so a pre-approval from a bank may mean something different than a pre-qualification or a pre-approval from me. So I’ll let you know what the actual aspects within a pre-approval are or a pre-qualification that you should look for in order to determine if what you have in your hands is actually sufficient for your needs.
If you watched or read our last blog you know we’re looking for things like your income, your debts, and your credit history. We take all that information to form a picture of how much money you will be able to borrow and what interest rate you can get, and also the amortization period your payments will be structured within.
So to determine if you have a full pre-approval or pre-qualification done you will be able to get a piece of paper that says something like, based on all the information you actually qualify for a mortgage x amount. There is no range and there are no conditions, either you qualify for x amount or you don’t and maybe you’ll be provided with some suggestions for how you can become qualified for the amount you’re looking for.
2. Rate Hold:
A lot of you out there may have rate holds, but a lot of you may not because you might be thinking if interest rates go up a little bit you’ll get a rate hold then, but you won’t really bother to do it now.
There’s two things you’re risking without a rate hold. Number one is if interest rates are higher you pay more in your mortgage, but number two, I find a little more important, is that if interest rates are higher you actually qualify for a smaller mortgage amount. So think about this, if you’ve been out shopping and finding a house and you finally find your dream home and you go to finalize your mortgage, but interest rates are a little bit higher and you come up $10,000 short what are you really going to do at that time? You can’t get as much mortgage as you originally thought you could
You’ve provided all this information about your income, your debts, and your downpayment you do need to provide documentation in order to confirm these facts and if you wait until the very end, like a lot of people, to provide these documents and we find any surprises like if the numbers weren’t coming up the way we thought they were in our application and your employment status is a little bit different than you thought it was then at that point it’s too late you’ve already jeopardized your entire mortgage application if we cannot confirm these documents the way we think they should be written.
So if that’s confusing to you or you have additional questions give us a call and we’ll let you know if what you have in your hands is sufficient, or if it’s a pre-approval or pre-qualification or if you really need a second opinion.