What does it mean when you " prequalify" for a home loan?

Question

Do I really need 20% down or can I get away with less?

I entered my stuff in the B of A web site. They have a link where you enter your info and they tell you how much house you can buy ( how much $ you can borrow) so I guess in this sense, prequalifying really does mean something.........right?

Answer 1

Prequalifying is NOT The same thing as a preapproval.

A prequalify is generally jsut when you look at basic stats-- income, bills, purchase price, etc, and see if the numbers make sense.

A preapproval means they actually verify everything-- credit score, employment (check subs/W2's), etc.

You are NOT approved to go shop until then. Also, generally website approvals do assume 20% down, and if your credit is not excellent you may not qualify without that, or you may get a higher rate (and thus be approved for a lower amount as this will up your monthly payment).

Answer 2

In the prequalify letter it means that with the info they have right now, you would be able to get a loan.

Getting pre-approval is better if you are trying to make an offer on a house.

If the pre-qual letter says you can qualify for X amount of a loan with putting 20% down, then you have to put 20% down... if not, you can get away with less.

Realize that you are paying a lender when you get a loan through them and you can ask them as many questions as you need/want to. Be super informed abotu the loan and buying processes so you avoid any problems in the future. Once you sign on the dotted line you can't say "I didnt know" as a good reason for some kind of problem.

Answer 3

Prequalify is when you talk to a mortgage rep. and they determine how much of a loan you could get based on your credit scores. No there are still a lot of programs out there that you could get 100% financing with, tho it is starting to tighten up. Also when you talk to a mortgage rep. take into consideration what all of your bills will be and some money left over for emergence and fun.

Answer 4

Pre-qualified it when the loan officer takes a look at the numbers you provide. Being "qualified" means the loan company has run a credit report and your numbers and have a very good idea of your credit worthiness and ability to repay a loan. And Yes, you could put less than 20% down, but you will most likely pay PMI until your loan reaches 20% equity position to the loan.

Answer 5

You want to be pre approved rather than pre qualified. Pre approved is going thru the entire loan process. Pre qualified is just a credit check and running some numbers based on your word without verification. Technically you haven't even applied for a loan.

The more you put down the stronger your position is in the bargaining process and the better your terms will be. You certainly will be able to get a loan for less than 20% down.

If you are in the market for a mortgage, home equity loan, or refinance get up to 4 FREE No Obligation Mortgage Rate Quotes at http://www.m-o-r-t-g-a-g-e-r-a-t-e.com

LEARN HOW you can save some serious money with
http://www.h-o-m-e-e-q-u-i-t-y-l-o-a-n.com and FREE Home Equity Loan Information

Get details on a FREE HOME SECURITY SYSTEM http://www.h-o-m-e-s-e-c-u-r-i-t-y.com

Answer 6

The word "Prequalify" means they will do a credit check on you. That is what that word means. If you make pass that good luck. When they use that term you are not qualified yet.

Answer 7

If you received an unsolicited letter telling you this, it means that the lender is using a "shotgun" approach to get applications for new loans, nothing more.

If you are actively seeking to buy a home, and have contacted lender(s) to see how much they will lend you, then "prequalification" means the terms & conditions under which the lender will entertain a formal application for a loan, and the loan will be approved if all the conditions are met.

Answer 8

it must mean that your credit rating was known to them before you asked for a loan.