If you’re looking to become a homebuyer, prequalification should be the first step of your journey in a hot housing market. It helps narrow your scope on what kind of mortgage loan you can afford and gets the ball rolling.
What is pre-qualification for a mortgage?
Prequalification is the first step in obtaining a home mortgage. This is the first step that a borrower can take to be prepared and secure a mortgage in a hot housing market. By getting pre-qualified, you’re seeing which home loans you’re able to afford, and determining what your home options are. It also gives you the assurance that you’re more likely to close the deal, and it speeds up the timeline of doing so.
But is getting pre-qualified for a home loan worth it? We think so because at Quontic, getting one step closer to becoming a homeowner takes just minutes. Here’s how to get pre-qualified for a home loan.
How does it work?
To start the process of getting pre-qualified, you’ll want to reach out to a trustworthy lender who can properly assess your situation. When potential homebuyers come to Quontic, our loan officers look at a borrower’s entire financial profile, including their credit report, standard tax documentation, or income verification such as W2’s and pay statements, and other financial records. That’s good news for borrowers who have non-traditional income because the difference between finally closing on a home and waiting 3 months on a mortgage application only to be rejected cannot be understated.
Additionally, a lot of times, borrowers will ask us, “What credit score is needed to buy a house?” And that really is one of the first things we evaluate on a case-by-case basis when getting a borrower pre-qualified. For example, to qualify for one of Quontic’s Community Development Loans, a borrower must usually have a minimum downpayment of 20% and credit scores must be at least 660 to qualify. But that’s not to say that’s the only good credit score to buy a house, and our CDLs aren’t the only flexible mortgage loan option that we offer.
In general, we’re able to look at a borrower’s big picture and pre-qualify them for a home loan based on that. In addition to a credit check, we’ll go over income information, basic information about bank accounts, your down payment amount, and your desired mortgage amount.
As a U.S. Treasury certified CDFI (Community Development Financial Institution), Quontic’s mission is to provide non-traditional prime mortgage financing to low-income households, small business owners, immigrants, and other diverse borrowers. We base our underwriting decisions upon character, credit, equity, and the borrower’s overall circumstances—not solely on their credit report.
How is getting pre-qualified different from getting pre-approved for a home loan?
Understand that although pre-approval and pre-qualification are similar, the pre-approval process is much more thorough. Pre-approval for a home loan is the final stamp of approval a lender can give you for a specific mortgage, whereas the goal of prequalification is to give you a good idea on what you’re eligible for when buying a home. If you’re ready to make an offer on a home, getting pre-approved will help you stand out among other buyers, especially if your lender provides a pre-approval letter. With a pre-approval letter, a borrower that is pre-approved for a home loan has their finances and creditworthiness verified.
But if you’re a borrower just entering the home buying process, especially first-time home buyers who may have questions about good credit scores and what mortgage loans you can afford, getting pre-qualified is definitely worth your while. By getting pre-qualified, you can start house-hunting knowing how much you will likely be able to borrow. Furthermore, if you get pre-qualified with Quontic, you can become better acquainted with which of our flexible mortgage offerings may be the best fit for you, whether you’re low-income, self-employed, or a non-traditional income earner, or anything else.
Quontic can help you through the entire homebuying process. From getting you pre-qualified, to pre-approved, to closing on your dream home. Find out if you pre-qualify for a Community Development Loan on our website.