Michael Emilio

Getting prequalified for a mortage determines how much you can afford to pay for your home. It allows you to act as quickly as possible when you find the right home, especially when there are other interested buyers. Very importantly, it also shows the seller that you are serious about purchasing the property and that you are able to afford it.

Here are the steps to become prequalified for a mortgage:

1. Ask around and get a referral for a mortage broker. Getting a referral from your Realtor is a great place to start.

2. There are two pieces of financial information that you should have on hand. These are your gross monthly income and the total payments that you make per month (these monthly payments include car payments, credit card minimum payments, etc).

3. Finding your debt-to-income ratio is usually done along with your lender but you may wish to do this on your own also. Add your monthly debts together and compare that number with your income to find your total debt-to-income ratio. If your percentage is under 36 you’re in great shape. If not, don’t worry, there are ways to overcome this.

4. Your lender will take a look at your credit report with your authorization. This includes your FICO (Fair, Isaac and Company) score. This score is a system used by lenders to calculate how good your credit is.

5. Final step, have your lender write up a prequalification letter. This letter will state that your financial information is satisfactory. You are now officially prequalified and it’s now time to find your dream home!

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