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Ready to buy your next home? As a prospective homebuyer — or as a realtor — you want to make sure you know what you need to qualify for a home loan. In order to prepare for this huge step, here is a home loan prequalification checklist.

What Is Prequalification, Exactly?

First, it's important to note that pre-qualification can be a good first step in the home buying process, though it's not required. If you're looking to get a mortgage, you'll want to get pre-qualified by a reputable lender first. This is an easy process, but it's important to remember it's not the same as being pre-approved for a mortgage — though some lenders may use these terms interchangeably. The process of pre-qualification takes a look at your numbers and can give you an idea of how much you may be approved for, though nothing is set in stone.

In order to get prequalified for a home loan, here's what you will need:

  • Income: A lender wants to know how much you can reasonably afford for a mortgage given your current income.
  • Assets: On top of your income, a lender may want to know how your overall financial health is and know that you can handle a responsibility like a mortgage.
  • Debts: A lender wants to know how much debt you have — and look at your overall debt-to-income ratio in order to assess what you may be able to afford.
  • Credit: A peek into your credit history can offer a lender an idea of how responsible and creditworthy you are.

The good news is that with this information, you may be able to be pre-qualified by a lender and that this process may take place in person or by phone.

Having a prequalification letter can show that you're really serious about homebuying - and can open doors in the homebuying process and make the mortgage process much easier. It can save you time and a lot of hassle so that you know what you can actually afford.

Bottom Line

If you’re ready to buy a home, getting prequalified is an important step to take. You will have a clear idea of your budget when house shopping, and you’ll be prepared to place an offer when you stumble upon your future home. Keep this checklist in mind and contact a mortgage loan officer when you are ready to take the first step.

Disclosures

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

By selecting any external link on www.Key.com, you will leave the KeyBank website and jump to an unaffiliated third party website that may offer a different privacy policy and level of security. The third party is responsible for website content and system availability. KeyBank does not offer, endorse, recommend, or guarantee any product or service available on that entity's website.

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