Mortgage Pre-Qualification Basics

Mortgages

What ALL Homebuyers Should Know About Getting Pre-Qualified for a Mortgage

PeoplesBank Mortgage ConsultantsHome buying doesn’t have to be a stressful process, even if you’re in a hot market. Homes can go fast and everyone is looking for that competitive edge to secure the home of their dreams. “One way to get a leg up on other buyers is to get a pre-qualification letter, but not all letters are created equal,” says Beverly Orloski, Vice President and Mortgage Consultant at PeoplesBank. “If you’re looking to buy a home and want to be considered a serious buyer, a mortgage pre-qualification letter is a must-have.” Ms. Orloski is part of the mortgage team at PeoplesBank that includes consultants Lisa Baltronis, Kathleen Caputo, Angela Liebel, John Peterson and Victor H. Rodriguez Sr. Here are the reasons these mortgage pros feel some pre-qualification letters are better than others.

Not all pre-qualification letters are equal

The terms of a pre-qualification letter can vary across lenders, but the basic concept of a pre-qualification is that a financial institution says it is confident in giving you a specific loan amount. Determining that figure is based on a variety of factors, with major ones being income, credit, job and work history, any other debts (e.g., credit cards, car lease, etc.) and the term limit of the loan (e.g., 15-year, 30-year, etc.). Yet not all lenders do a thorough examination of your financial history before providing pre-qualification letters; some do not even check a borrower’s credit history. “The reality is you can get a pre-qualification letter from almost anywhere these days. In fact, you can get a letter online in a matter of seconds,” suggests Ms. Baltronis. “But just because you can get one anywhere doesn’t mean they’re all the same.”

When a lender doesn’t verify the right types of financial information it’s bad for the borrower and the real estate agent. It gives the borrower a false sense of security and when they try to procure the loan they may be rejected. Many of the services that are found online do a superficial job of evaluating the credentials of the borrower and, while you can still get a pre-qualification letter, it won’t give you the same competitive edge as a pre-approval with a more thorough look. “Real estate agents and many sellers are wary of pre-qualification letters from lenders they don’t know or don’t trust,” says Ms. Caputo. “When you have a pre-qualification from a familiar, trusted source, you have a distinct advantage over buyers with pre-qualifications from questionable online vendors.”

The benefits of having an accurate number

Have peace-of-mind with a free mortgage pre-qualification letter from PeoplesBank.

Another important reason to get a pre-qualification letter from a reputable lender is so you get an accurate sense of how much money you can borrow. A proper lender will not only look at your financial history but also at your current income and how much you’re already paying out in rent and bills every month. “We do a thorough check before we land on a number so our clients don’t waste time looking at homes they can’t afford,” adds Ms. Liebel. “But when they do find the perfect home in their price range, they can make an offer on the spot and both the real estate agent and sellers know they are a serious buyer.”

The right lender will sit down with you to determine what type of home loan best suits your situation, as well as describe the features and benefits associated with various mortgage options. They will also educate first-time buyers on the additional costs of homeownership, home maintenance and additional utility costs. “These are things that should be factored in right from the beginning so the borrower doesn’t end up not having enough money every month,” notes Mr. Peterson. The mortgage bill is just one of the many costs of owning a home and especially for people who were previously renting it’s important they consider how much more they may need to pay in property taxes, utilities and upkeep.

A good pre-qualification letter helps at closing too

The last and most exciting reason to get a pre-qualification letter from a reliable source is that it can streamline the closing process. Pre-qualified buyers have established a relationship with a mortgage lender and know more of what to expect in terms of qualifying for a mortgage. While pre-qualifying doesn't eliminate the possibility of delays before closing, it can reduce the possibility of surprises involving your ability to get the loan you need.

“My advice to anyone who is ready to start looking at homes is the same,” states Mr. Rodriguez. “Get your financial house in order and your paperwork ready, then sit with a trusted lender to get a pre-qualification letter that puts you in the driver seat.”

 

Contact a PeoplesBank Mortgage Consultant or Get Pre-Qualified online.  

 

 

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