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Why Mortgage Qualification is Key for Buying Foreclosures
The Basics of Mortgage Qualification
Mortgage qualification needs to be done long before you find any foreclosures for sale that you want to bid on. Pre-qualification is basically the opinion of a lender that you will qualify for a mortgage of a specified amount based on information you have provided, including your income, assets, and debts. Pre-qualification does not guarantee you a loan, and it is based on the presumption that your credit rating is sufficient to obtain a loan for this amount.
Pre-qualification is based on current interest rates. If the rates increase, or if any of the information you have given changes or turns out to be inaccurate, the pre-qualifying amount may be revised according to the altered circumstances. If your credit report proves to be unsatisfactory, the mortgage qualification may be withdrawn.
Once you have gone through the pre-qualification process, the lender will give you a letter stating the amount for which you are pre-qualified. When you are ready to place an offer on a potential home purchase, you may submit the letter with your offer. This is advised since oftentimes the seller will ask you to present a pre-qualification letter with the offer.
Why You Should Get Pre-Qualified When Buying Foreclosures for Sale
When you are in the market to buy a home, pre-qualification gives you a good idea of how much house you can afford. This is a great help when it comes to deciding on property size, neighborhood, amenities, and many other considerations.
Having a pre-qualifying letter also demonstrates to sellers that you are serious about buying a home, that you can afford to purchase their property, and that you already have a lender who is interested in working with you. Submitting your pre-qualification letter with an offer also lends weight to your proposal, letting the homeowner know that you are ready to buy as soon as possible and that the mortgage loan is in place.
How to Get Pre-Qualified for a Mortgage Loan
Pre-qualifying for a mortgage loan is a simple process, and it should not cost anything. You will need to have certain information available to you, including your monthly income, any assets you own, and the amount of any debts you may have. You will not need to document any of this information yet, but it is best to be as accurate as possible.
Once you have the necessary information, contact your mortgage broker and schedule an appointment. The lender will review your information and calculate your debt-to-income ratio. You will then be given an opinion on the mortgage loan amount for which he or she believes you will qualify. Keep in mind that this is not the same thing as pre-approval, and the lender is not entering into a commitment to offer you a mortgage at this time.