Queer Eye Homes - Getting Prequalified for a mortgage loan in Fort Lauderdale

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We cannot over emphasize the importance of getting prequalified for a mortgage prior to your home search. Many savvy sellers are now requiring that offers to purchase their home be accompanied by a prequalification letter. And that's a good thing - for them and you.

Sellers want to know that the person that they are negotiating with can secure financing for their new home. And you certainly don't want to waste your time getting excited about a piece of property that you can't get financed. If you and another person are both interested in one home, the seller is more likely to work with the person who is already prequalified, because they do not want to take a chance that the other person will not get approved for a loan.

The first thing that you will want to do is to seek out a few lenders and compare rates. You can do this online or you can call up a bank or mortgage broker. Once you have determined the current "going rates" you can go to the mortgage calculator and plug in various purchase prices and interest rates in order to get an idea of how much your monthly payment will be and how much cash you will need at the closing table.

Lenders will ask you typical "loan application" type questions to find out if you prequalify. They will need to know how much money you earn, the total of all of your bills and your past credit history. Here are some of the factors that will determine your prequalification level.

Your Housing Expenses (Principal, Interest, Taxes and Insurance) should be less than 28% of your gross income. The exact figures vary. Some lenders will require less. Talk to your Real Estate agent or a mortgage broker. They can advise you on which lenders may require less.

Your Total Debt to Income Ratio should be less than 36%, the lower, the better. This means that your total credit card bills, car payment, and other monthly debt added on to your monthly house payment should be no more than 36% of your monthly income.

Your Ability to Prove a steady income and your credit history. Lenders will want to see an income history and they will pull a credit report to see how promptly you have paid your bills in the past.

The Property Value compared to what you are paying for it. If you are paying less for a house than its appraised value, that will increase your chances of getting prequalified. On the other hand, if you're proposing to pay more for your house than it's calculated fair market value, then the lender will be less likely to lend you the funds.

Note: Prqualification only qualifies you for a loan. It does not quarantee a loan.

Once you have your prequalification letter, do not make any significant purchases on your credit cards. In other words, don't go out and charge up a house full of new furniture, buy a car, or get a consolidation loan. Your prequalification was based on the information you gave when you applied for the loan. Don't do anything to change your credit standing or level of indebtedness until after you have closed on your new home.