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Posted on Monday, August 1, 2022 in Mortgage Lending

What is Prequalification and Why is it Important?

In today's real estate market, mortgage loan prequalification is a must-have for buyers who want to be taken seriously by real estate agents and sellers. Real estate agents want you to be ready to purchase a home before they are willing to spend countless hours showing you properties and preparing offers on homes that you can’t get financed. 

Mortgage prequalification is an informal evaluation of your creditworthiness and how much home you can afford. Prequalification indicates whether you meet the minimum requirements for a loan.

Prequalification is also an important step for those who aren't sure whether they're financially ready for homeownership. You can also use our home affordability calculator to get a sense of what you can afford as you begin thinking about buying a home.

Once you know approximately how much money you may be able to borrow, you can start looking for homes within your financial range, which can save you a lot of time during your search.

Talk to a Lender

The first step to get prequalified for a mortgage is to speak with an experienced First National Bank lender who will offer their professional advice and walk you through the mortgage and prequalification processes. There are no fees for consulting with a mortgage lender or applying for prequalification; and there is no obligation to obtain a loan. 

When applying for mortgage loan prequalification, your lender will ask you questions about your finances, including how much you are hoping to borrow, what funds you have available to contribute toward a down payment, and what assets, income, debt, and expenses you have. The bank will also pull your credit report.

If you’ve been through a bankruptcy or foreclosure, expect to be asked about that, too. Depending on the type of loan, you might need to wait for some time to pass before being eligible to qualify for a mortgage.

Get Answers Quick

Because prequalification is an informal, nonbinding evaluation, you can get prequalified for a mortgage loan in a day or two, sometimes less.

If you meet the lender’s guidelines, you will be notified of the estimated home loan amount the bank is willing to let you borrow.

Finalizing Your Mortgage

Prequalification doesn't guarantee approval of your loan. When you find your dream home, you will complete the full loan application, supply documents to verify your financial information, and begin the loan approval process. 

First National Bank is an Equal Housing Lender.

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