How does pre-qualification work?

Posted on May 06

Question: If I work with a mortgage broker, do they actually ask the lenders to do the pre-qualification or do they actually do it themselves? how does it work?

The ‘normal’ process for a Pre-Qualification would involve the originator completing an application, pulling your credit, and reviewing your income & assets. A next step would include running your application through and electronic Underwriting process.

If you have a typical situation, the process is the same for a single person mortgage broker to the largest bank.

The impact on credit scores is more complicated, but, if you’re going to buy a home, your credit will need to be pulled, which will impact your score. If you decide to shop around, make sure all lenders pull the reports as close as possible to one another

One thought on “How does pre-qualification work?

  1. Right now you will probably need to have a minimum of a 680 mid score with a 20% down payment to get the best rate on an owner occ mortgage. There has been quite an increase in foreclosures and a large decline of lenders in the sub-prime market recently. All lenders have tightened up their requirements for % of LTV, credit score, debit to income, everything. The wave has not stopped yet. You may see more tightening of terms and these are changing almost daily. One real positive thing is that interest rates are still at all time lows. Conventional and FHA loans are still excellent fixed rates for buyers. Make sure you deal with a reputable loan officer and get all information in writing.

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