Why Should I Get Prequalified for a Mortgage?
If you’re looking to buy a home this Spring, getting prequalified for a mortgage can help you identify a realistic price point and make your offer more attractive to the seller.
The sound of lawnmowers humming and birds chirping can only mean one thing — springtime has arrived. But the weather isn’t the only thing heating up. Peak home buying season is upon us as well.
If you’re looking to buy a home this spring or summer, the time to get prepared and prequalified is now. Getting a mortgage prequalification letter from your lender is crucial as you shop for a home in the coming months.
The Benefits of Getting Prequalified For a Home Loan
A major benefit to getting prequalified is that it provides you with a realistic budget as you search for your future home. This helps you identify your price point and shop more efficiently. Many times, buyers get ahead of themselves and begin shopping for homes when they are unsure of what they can afford. Prequalification takes the guessing out of the equation and saves buyers time, energy and potential disappointment.
In the current real estate market, prequalification is essential, especially for first-time buyers. Being prequalified is not only smart but is sometimes required to make an offer on a home. In a multiple offer scenario, buyers without a letter of prequalification are often not taken seriously. Getting prequalified for your mortgage loan makes you more attractive to a seller, because it demonstrates that you’re a serious buyer with viable credit.
“One of the best tools a potential buyer can have in their toolkit is a letter of prequalification from their lender,” says Jeremy Holmgren, regional sales manager for Zions Bank Home Finance. “Once you are prequalified, you have a competitive buying advantage compared to those who have not yet begun the loan application process.”
Getting Started with the Mortgage Prequalification Process
The first step is to apply for a mortgage with your chosen lender. Zions Bank’s new online mortgage portal streamlines the home loan process, allowing you to complete your application and submit documents entirely online. The process is simple and can speed up the time it takes to get prequalified and complete your home purchase.
Once you’ve completed your application, your lender will typically take the data you’ve submitted, combined with your credit information, and provide you with a letter of prequalification. This letter indicates that the bank or lending institution is willing to finance your home loan and also specifies the dollar amount you qualify for.
Keep in mind that a prequalification is nonbinding and it is not a guarantee that you’ll get a loan. Final approval is based on underwriting review of your loan application, income and asset documentation, credit report and specific loan terms.
In addition, if your loan doesn’t close within 30 days of prequalification, you should expect to provide updated paystubs and bank statements to your lender to verify that your circumstances haven’t been negatively impacted.
Preparing for Mortgage Prequalification in the Future
Not ready to buy yet? If you intend to purchase a home in the future but aren’t quite ready to apply for a loan, there are still steps you can take to prepare:
- Take an inventory of your credit and work to make improvements. You can order one free credit report every year by visiting annualcreditreport.com.
- Pay off debt and save for a down payment prior to submitting a mortgage application, which will allow you to put your best foot forward when you’re ready to buy.
- Use a Zions Bank mortgage qualification calculator to see how much home you can afford to buy.
Visit the Zions Bank Home Loan Learning Center to compare home loans, answer your mortgage questions and discover additional mortgage resources, including a directory of Zions Bank mortgage lenders across Utah and Idaho as well as more information about the home buying process.
Loans are subject to credit approval. Terms and conditions apply. See a banker for details. Equal Housing Lender. NMLS #467014.