If you’re shopping around for mortgages, you’ve probably heard about pre-qualification processes – or maybe even received a pre-qualification offer in the mail. Lots of prospective homeowners hold misconceptions about what exactly pre-qualification is and how it works, and it leads them to opt into a poor mortgage deal.
But by understanding how pre-qualification works, you’ll be able to find the right mortgage for you – at the best possible rate. So what is mortgage pre-qualification, and what isn’t it? Here are three common pre-qualification myths that you may have heard.
Pre-qualification and pre-approval are often discussed together, but they are not the same step in the mortgage process. Pre-qualification is generally an early review that helps you understand your options, while pre-approval is a separate stage that involves a more formal evaluation by a lender.
Many homeowners mistakenly believe that being pre-qualified for a mortgage commits them to a specific lender. In truth, being pre-qualified only creates an opportunity for a lender to work with you.
The pre-qualification process doesn’t involve any loan contracts and doesn’t require you to pay the lender. Few homeowners know this, but you’re actually not at all committed to any particular lender until you sign the closing documents.
Pre-qualification is also generally a free process, although some lenders will ask you to pay the $20 fee it costs them to check your credit report. Typically no lender will ask you to pay more than $20 during pre-qualification.
Another common myth is that shopping around for the best rate will hurt your credit score as a result of having multiple credit checks done. Some lenders may tell you this is true in order to discourage you from checking out other lenders. But according to FICO, mortgage inquiries aren’t handled the same way that other credit inquiries are.
There are several misunderstandings about mortgage pre-qualification, and it is important to look closely at each one before making decisions during the home-buying process. Taking time to separate myths from reality can help you better understand what pre-qualification does and does not mean.
Mortgage pre-qualification may seem like something you don’t want during a house hunt, but in truth, it’s really just a small gesture lenders make in order to make the mortgage process faster and simpler. If you’ve been pre-qualified for a mortgage, you will still need to go through the standard application process before you’re approved. To learn more about the mortgage application process, or to apply for your new mortgage today, contact your trusted mortgage professional.
Sammamish Mortgage can help. We serve clients across Washington, Idaho, Colorado, Oregon, and California. We offer many mortgage programs and products with flexible qualification criteria, including our Diamond Homebuyer Program, Cash Buyer Program, and Bridge Loans. Visit our website to get an instant rate quote or to use our online mortgage calculator. Please reach out to us if you are ready to get pre-approved for a mortgage.
Mortgage pre-qualification is an initial review of your financial information that helps estimate how much you may be able to borrow.
No. Pre-qualification does not bind you to a lender, and you are not committed until you sign closing documents.
No. Pre-qualification does not involve signing a loan contract.
Usually it is free, although some lenders may ask you to cover the cost of a credit report.
Mortgage rate shopping generally does not affect your credit score the same way multiple unrelated credit inquiries do.
Some lenders may discourage it because comparing lenders can help borrowers find better mortgage terms elsewhere.
No. Pre-qualification is only an early step and does not replace the full mortgage application and approval process.
Yes. Pre-qualified borrowers still need to submit a standard mortgage application before final approval.
Lenders use pre-qualification to give borrowers an early estimate and to help make the mortgage process faster and simpler.
Yes. Comparing lenders can help you find the mortgage that best fits your needs and offers the most competitive rate.
Our loan officers are ready and waiting to help you apply for your home loan.
Whether you’re buying a home or ready to refinance, our professionals can help.
Mortgage Support — 24/7
No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.
Adjust the parameters based on what you want to track
