Pre-Qualification
Categories: Mortgage
Great news: after a year of searching, we’ve finally found our dream house. It’s got plenty of space, quiet neighbors, and a pool, and it’s listed at $400,000. Now for some even better news: we already know we can get a home loan for the full amount, because we’ve been pre-qualified.
What’s “pre-qualification?” It’s when a lender takes a quick glance at our financial info (like our income and credit score) and tells us how much they’re tentatively willing to loan us. In our case, our lender said we’re pre-qualified for a home loan of up to $550,000. So that $400,000 house? It’s well within reach.
One important thing to note: just because we’ve been pre-qualified for something, like a loan or a credit card, it doesn’t mean we’re automatically going to get it. Remember when we said our lender only took a quick glance at our financials? Well, if we want to go ahead and secure that loan, that “quick glance” will turn into a much deeper dive. We’ll also have to formally apply for the loan, and if there’s something iffy hidden in our financial records or credit report...there’s a chance we won’t get it.
