Getting Qualified

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Are you asking yourself, “How much home can I afford?” When this question first pops up, you may not know how to find the answer. Getting prequalified or preapproved for a mortgage can be a good starting point. But what’s the difference between the two?

Both mortgage prequalification and mortgage preapproval are ways for lenders to let you know approximately how much money you can borrow from them. But each process is a little different.

Prequalification is a more preliminary process than preapproval. Typically, lenders only perform a soft credit check when they do a prequalification, if they check your credit at all. Such a credit check won’t have any impact on your credit score and therefore will not allow the lender to make a full evaluation of your mortgage options.

For a true mortgage preapproval, lenders perform a more rigorous check of your finances and will perform a hard credit check, which will have some impact on your credit score, although it should be relatively small. You will likely fill out an application, and the lender will approve you for a specific loan amount.  A full mortgage preapproval will give you the confidence to start your home search with confidence that your mortgage credit package meets the minimum requirements to obtain a final approval for the mortgage.



Instant Mortgage Approval (SNAP)

Click here to receive an instant mortgage approval. With Best Choice Lending's "Mortgage in a SNAP", you will receive a full mortgage approval instantly.  The process will take less than 15 minutes to complete and you will be issued full mortgage approval. 


Pre Qualification

Click here to get pre qualified for a mortgage. The form will take less than 2 minutes to fill out.


How Does a Lender Judge Your Qualifications

The first step in the mortgage process is obtaining a preapproval or prequalification, which will determine how much a lender will lend you.  Most lenders use national guidelines to determine the maximum amount that they will lend.   Within the context of these standards, some lenders choose to be lenient and flexible, while others are strict.  To pre qualify you, lenders look at the following information:

  • Employment History
  • Credit History and Scores
  • Monthly Income and Expense

Unemployment is one of the two largest causes of mortgage foreclosure, the other being divorce.  Ideally lenders like to see an employment history of 2+ years with the same company, or in the same line of work.  A few job changes with increases in salary and responsibility are not frowned upon.  Stability of income is a very important factor to mortgage lenders when they pre qualify you.  For salaried employees, lenders look at job history for at least the past two years.  For those who are self-employed, considered if you own a 25% or greater interest in the business that employs you, lenders will look at profitability and cash flow of the company and also personal income.

Credit history and scores can play a big role in the pre qualifying stage in the mortgage process.  Lenders order mortgage credit reports from local credit bureaus, which gives individual credit history and scores.  Credit bureaus collect information from retailers, banks, finance companies, mortgage lenders, and a variety of public sources on all consumers who use any type of credit, including credit cards, car loans, mortgages, personal loans, and charge accounts.  The credit score is based on a statistical analysis of your credit history.  Factors that determine your credit score vary from company to company, but generally include:

  • 35% History of Past Payments - on all types of credit
  • 30% Amount of Credit Outstanding - balances on your credit cards and other loans compared to the credit limits for those loans
  • 15% Age of Credit - of all credit cards and charge accounts
  • 10% Mix of Credit - car loans, charge cards, mortgages, etc.
  • 10% Recent Credit Inquiries - suggesting that you are seeking additional loans or credit cards 

The credit score model many lenders use is the FICO score.  FICO scores range  from 350 to 850, with 850 being the best score.  The higher the score, the less likely there will be a  default on a mortgage.  Therefore, the better the score, the easier it is to pre qualify.  These scores are viewed as very accurate predictors of future delinquencies.

The size of the mortgage that can be afforded monthly, can estimated through two essential ratios: housing ratio and debt ratio.  Housing ratio is determined by your total monthly mortgage payment divided by your total monthly income.  The total debt-to-income (DTI) ratio is determined by the sum of your total monthly mortgage payment and other fixed monthly debt payments divided by your total monthly income.  If your DTI is too high, lenders may decide to deny the application.  For pre qualification purposes, the maximum housing ratio of 28% and a maximum DTI of 36% (28/36) is used to conform with the generally accepted mortgage guidelines.  However, today, you can get by with a much higher DTI, if you can show that you can make the payment. A full mortgage preapproval will better determine the maximum DTI and monthly payment you can afford.

Some lenders evaluating a credit application are not tied down by strict industry standards.  They will look at your loan request and see if it makes sense.  If further explanations of any situation that will make your application look better, then by all means do so.   Document all claims and explanations in writing if possible.

If you would like to get additional information about pre qualifying for a loan or see how much you can pre qualify for, fill out the Short Form.

Pre Qualifying

Employment History

Stability helps, 2+ years in same line of work - income fixed or increasing

Credit Score

Cancel cards you are not using.
Clear any bad credit
Make sure it is accurate
Not too many requests for credit
Check your own credit before hand

How much can you afford?

28% of gross income or 36% of all Recurring Expenses is a general rule, but your Loan Officer can usually help you qualify for higher ratios

Lock in the Rate

Shorter lock periods will lower interest rate, but lock periods of 30-45 days are highly recommended

Robert Katner


Brookstone Realtors


8040 Ortonville Rd
Clarkston, MI 48348

Mobile: 248-379-1717

Office: 248-890-5504



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