If you’ve been thinking about buying home, you may be wondering when the right time is to begin seriously exploring your financing options. Should you start now, or wait until you’ve found and made an offer on a home?
While final approval of your loan is dependent on a thorough examination of your credit, income, debts and assets, prequalification may provide you with a general idea of the amount and type of loan for which you could potentially qualify, based on a snapshot of your financial situation. This may help you be more targeted in your home search by allowing you to eliminate properties that would clearly exceed your price limit.
Whether you’re beginning to look for your first home or your fourth, getting prequalified for a mortgage loan may make your search more efficient and effective. A prequalification from a lender serves as a demonstration to both real estate agents and sellers of your serious intent to buy. And, you don’t need to have a specific property in mind to get prequalified. Therefore, it may be best to make prequalification the first step in your home buying process.
While it may be more convenient to continue the loan application process with the lender that assists you with your prequalification, there is no obligation to do so. Likewise, getting prequalified does not hinder your ability to compare interest rates and loan terms of other lenders before making a financing decision, or to postpone your search entirely, should you choose to do so. However, keep in mind that your prequalification will typically come with a stated expiration date, usually around 90 days from its issuance.