Should I Get Prequalified?

It’s never too early to start! The better prepared you are as a buyer, the better your chances of obtaining that home of your dreams!

There are actually three levels of qualifications that a potential home buyer may have after contacting a lender. Please keep in mind that not all lenders may have the same standards or definitions, so be sure to check with YOUR lender.

All three letters, prequal, preapproval and loan commitment letter, are subject to property conditions, such as the title report and the appraisal. They are also subject to market changes, such as interest rates or possible program changes (until the loan or program is locked). And of course the letters are also subject to any changes the borrowers may make from what was used on their application, such as changes to employment, income, assets, debts or credit scores.

Prequalifed means that the borrower has talked with a lender and they have reviewed information. The borrower may have only verbally provided information to the lender to see if the borrower is “qualified” to buy a home at a certain price range or loan amount. The credit report may or may not be obtained at this point. This is a preliminary stage in the home buying process. A prequal letter is very quick to prepare and provide to a borrower.

A lender may issue a “prequal letter” if the borrower has not provided all supporting documentation required to be considered “pre-approved”.