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Tag: Prequalified

Getting prequalified is a part of the first steps of the home buying process. This comes before getting pre-approved and is a general estimate on how much you can afford. The estimate will be based on the information you provide about your finances, along with a credit check. This period is a good time to work with your lender to discover which mortgage is best for you. If you’re comfortable with your finances after getting prequalified, you might as well get pre-approved instead.

To calculate how much mortgage you can get, your credit profile and annual income will be considered. The expected loan term, interest rate, and monthly debt payments will also be included. Keep in mind the lender is only telling you how much you might be able to borrow. After all, the lender isn’t going to look at your finances as closely as they will during the pre-approval process. Therefore, the amount you were told at first is subject to go down or up.

If you’re still confused about how much you can prequalify, try using a prequalification calculator instead. It’s not always wise to borrow 100 percent of what the lender offers. The number they give you is simply the maximum amount the lender is willing to give you. That doesn’t mean your budget will allow for it.

Pre-Qualified vs. Pre-Approved

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Pre-Qualified vs. Pre-Approved

Getting pre-qualified and pre-approved are the very first steps of the home buying process. Without this step, you can’t get a mortgage, meaning can’t buy a home. Unless you’re a cash buyer. Nonetheless, most people will have to go through this process before home shopping. If you’re unsure of how much you’re likely to afford, try using a mortgage prequalification calculator first.

Here’s a homebuyer tip from Bank of America: “Expect surprises! Lenders look at every detail of your finances when granting preapproval. You might be asked about a car loan payment you made with a credit card, for example. Be prepared to answer lender questions as soon as they come up.”

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What Is a Mortgage?

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What Is a Mortgage?

A mortgage is a loan secured by the collateral of real estate. Mortgages typically have 15 to 30-year terms and can have a fixed or adjustable interest rate. The borrower is bound to make monthly payments to the principal, which is your outstanding balance. In the case that you stop making payments, the lender can take possession of the property. Otherwise known as the process of foreclosure.

All in all, the lender holds the most stake in your home. Therefore, by making monthly payments, you’re always increasing the amount of ownership in the property. Lastly, here’s a fun fact for you: The origin of the word “mortgage” is Latin and then came from Old French, which initially meant a death pledge.

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