Everyone dreams of owning a house. To achieve this dream, much time, effort and energy could be wasted when you rush around hunting for a home that is beyond your price range. Disappointment and frustration could be avoided if you take the time to determine your exact price range or the kind of home you can afford. Prequalifying can help you in determining this.
A pre-qualification is informal discussion between your lender and you. The lender will compute an estimate of the amount you could afford for home buying based only on the information of your income and assets.
The following are required to get pre-qualified:
1. Get a referral from family or friends for a mortgage lender.
2. You also have to submit these documents such as your gross monthly income, minimum monthly fees for credit cards, monthly car payments, child support or any other payments you make every month.
3. Your lender or you could add all your debts and compare the total amount to your income to be able to come up with a total debt-to-income ratio. The percentage must be below thirty-six to get the best rate of interest. The lower the number, the better chance to qualify.