Dreaming of buying a new home? You'll need a prequalification letter.
What is a Prequalification Letter?
A prequalification letter from a bank or lending institution serves as a preliminary decision indicating that a buyer qualifies for a certain loan amount. The bank accounts for the individual's credit and income when determining a prequalified amount, and the letter is typically good for about 60-90 days.
How do You get Prequalified?
To start the prequalification process for home mortgages, schedule an appointment with a loan officer to discuss your options. Expect the loan officer to ask for basic information about your financial history (and your co-borrower's, if you have one). They will also pull your credit report. Based on the initial information you provide, your income and your credit history, your loan officer will generate a written statement with the loan amount and guidelines. Keep in mind that each lender's process for determining whether to grant a loan is different. Getting a prequalification letter does not automatically guarantee you a loan.