Pre Qualify Mortgage? - Pre Qualifying Is Key First Step In Buying A New Home

Considering buying your first home? If so, your first step in the home buying process is to pre qualify for a mortgage. Even if you have bought a home before you must pre qualify before buying your next house. Mortgage program guidelines have changed considerably over the past few years. Mortgage programs are much harder to qualify for, so before you decide to spend time searching for your new home you need to pre qualify.

Pre Qualifying will help you clear up any unexpected problems you might have with your credit report, debt to income ratios, as well as inform you about any special homebuying program that you might qualify for. Not to mention, pre qualifying can help you prevent wasting your time and saving yourself stress in case you cannot get a mortgage for some reason or another.

• Better Credit And Credit Scores - There was a day when you could get 100% financing with a credit score of less than 550. You cannot do that anymore. Many lenders and mortgage companies will not approve your loan if you have a credit score less than 580. To qualify for a mortgage with the best interest rates and lowest fees you will need a credit score of more than 740.


• Money Down - Popular first time home buyer programs that used to be available for home buyers like no money down mortgages and 80 20 mortgage programs are not widely available like they used to be. Even FHA Mortgage Loan Programs have tightened up in the past few years. The least amount down that you can put on a home is at least 3.5% down payment - if you plan to get an FHA home loan.


• Debt To Income Ratios - Qualifying for a mortgage used to be such that you could approved through Fannie Mae's automated underwriting system with a high debt to income ratio up 65% if you had good enough credit and assets. Since the mortgage crash of 2007, mainstream mortgage lenders will not approve you for a mortgage if you have a debt to income ratio over 45%.

Once you pre qualify for a mortgage, you can then move to the next stage which is to get pre approved. See our section on getting pre qualified versus pre approved. And once you have been pre-approved you have what you need to go search for your dream home.