If you’ve decided to purchase a new home, one of the first steps in your homebuying journey is determining how much money you have and how much you need to borrow. While most first-time homebuyers are excited to look at houses, it is always recommended that you look at mortgage options first, before going house hunting.
When comparing different types of mortgages, knowing your borrowing limit definitely comes in handy for making the right decision. A mortgage pre-qualification is generally one of the best ways to discover how much you are eligible to borrow.
What is mortgage pre-qualification?
Mortgage pre-qualification is the process of determining how much money you are likely to qualify during your mortgage application. It gives you a preliminary estimate of whether or not you can actually manage to pay for your new home. In fact, it is one of the first steps you must take before beginning your homebuying journey, especially if you want to evaluate your monthly mortgage payments.
How does mortgage pre-qualification work?
Typically a mortgage pre-qualification does not involve a lot of in-depth financial review. As it is an initial assessment of your creditworthiness, a mortgage pre-qualification simply takes into account the details that you provide regarding your financial capabilities. This includes basic information such as your income sources, outstanding debts and your credit limit.
If you are getting pre-qualified, here is the information you need to provide:
Annual income: This is one of the first things that you will have to provide as you begin your process for pre-qualification as this helps evaluate your debt-to-income ratio (debt-to-income-ratio is the percentage of income that goes towards rent, mortgage, credit cards and other debts).
Bank account(s) and assets: To help determine your borrowing capacity, you must also provide details of your financial resources, such as your list of bank accounts and other assets such as real estate. This goes to establish your financial capabilities in making down payments and repaying your loans.
Outstanding debts: In order to get pre-qualified, you will also have to disclose if you have any outstanding debts or loans to repay. This is one of the most important factors in determining your creditworthiness.
Credit card limit: In addition to the above-mentioned details, you will also be asked to provide your credit card limit. This information is key for understanding your possible debts in future. A higher credit card limit or higher number of credit cards, despite timely repayments, can look bad on your loan application as lenders typically see it as a risk in lending you money.
Advantages of getting pre-qualified:
Estimate of mortgage you qualify for as well as monthly mortgage payments
Knowledge of the price range of properties you can afford.
Getting pre-qualified adds to your credibility as a buyer.
Pre-qualifying saves you time during the mortgage application process.
Get pre-qualified with letWizard to ease your bidding!
In addition to being a transparent digital property bidding platform where you can find your next dream investment, letWizard helps ease your property buying and selling process with its AI-powered Genie tools. letWizard’s Get Pre-Qualified Genie tool has been designed with the purpose to facilitate your mortgage pre-qualification process. You can use the Get Pre-Qualified Genie tool and find out how much you are eligible to borrow instantly. The AI-powered tool evaluates your financial history and helps you make the right decision when it comes to choosing a mortgage option, based on your requirement.
Want to bid on your dream investment property? Get Pre-Qualified today with letWizard.
