Mortgage Pre-Qualification

Are you interested in buying a home? What can you afford?

A mortgage pre-qualification can help you meet your goals when house hunting in two ways:

  1. It gives you a good idea how much you can afford to spend on a house
  2. The pre-qualification will hold a rate for up to 120 days, protecting you from any sudden rate increases. (Not all lenders guarantee rates.)

There are several factors that affect lender decisions when you are qualifying for a mortgage:

  • Your income and employment history
  • Your credit history  and current debt load 
  • The value of the property to be mortgaged
  • Your identity

Lenders use this information to judge you loan application. This is what they look for:

  • A housing expense ratio no greater than 32% – a lower ratio is best
  • A debt-to-income ratio no greater than 44% – a lower ratio is best
  • The home buyer(s) have steady income – ideally, they have a 2+ year history of employment with current employer
  • The home buyer has good credit – all bills are paid on time
  • The house is worth the price buyer is paying

 

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