Definition
An early step where a lender gives you an estimate of how much you might be able to borrow based on your financial details.
What to consider
- Gather your financial documents to get an accurate estimate.
- Use it to narrow down your home search.
- Remember that it’s just an estimate, not a final approval.
Real world scenarios
- Pauline submits basic income and debt information to get prequalified, giving her a rough home-buying budget.
- LaShawn’s prequalification letter signals to sellers she’s a serious buyer, smoothing negotiations on her dream condo.
- Brooke updates her prequalification when her income changes, ensuring the estimates remain realistic as she continues house hunting.
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