A Few Misconceptions About Mortgage PreQualification

A Few Misconceptions About Mortgage PreQualification

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If you are shopping around for mortgages, you have most likely heard about pre-qualification processes – or maybe even received a pre-qualification offer letter in the mail. Some prospective homeowners have misconceptions about what exactly pre-qualification is and how it works, and that can sometimes even lead to less than optimum mortgage deals.


However, by understanding how pre-qualification works, you will be able to find the right mortgage for you – at the best possible rate. Here are two common pre-qualification myths that you may have heard.


Myth: Mortgage Pre-Qualification Commits You to a Specific Lender


Some 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 does not involve any loan contracts and does not require you to pay the lender. Few homeowners know this, but you are actually not at all committed to any particular lender until you sign closing documents.


Pre-qualification is also generally a free process, although some lenders will ask you to pay a $25-$30 fee that it costs them to check your credit report. Typically, no lender will ask you to pay more than that during pre-qualification.


Myth: Rate Shopping Hurts Your Credit Score


Another common myth is that shopping around for the best mortgage rate will hurt your credit score because of having multiple credit checks done. There may be afew lenders who might tell you this is true in order to discourage you from checking out other lenders, however, according to FICO, mortgage inquiries are not handled the same way as other credit inquiries.


Mortgage pre-qualification may seem like just another hassle during your house hunt, however, it really does make the home buying process and the mortgage process faster and simpler. It is important to note that if you have been pre-qualified for a mortgage,you will still need to go through the standard application process before you are approved for your loan.


If you are just starting to look for your dream home, or are in the process of doing so, and you do not have a Trusted Advisor | REALTOR® assisting you, Call or Text a Trusted Advisor | REALTOR® from Martin Real Estate Advisors, a JP & Associates Realtors® Company, at (469) 262-5411 or visit our website at www.martinrealestateadvisors.com. We will gladly assist you with your home search, and get you in touch with one of our lending partners who can assist you with all your mortgage needs.


Annette Bruen Headshot
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Phone: 972-977-3221
Dated: August 28th 2015
Views: 485
About Annette: Before making the move to help families realize their real estate dreams, Annette made her professio...

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