How to Determine Your Mortgage Eligibility
Before you apply for a loan, it is a good idea to try and gauge your mortgage eligibility as not to impose an unnecessary inquiry on your credit report and lower your score. Hard inquiries can have a negative effect, making it even more difficult to attain the loan you're interested in.
Pre-qualification comes before pre-approval of a mortgage
Prior to pursuing pre-qualification for a mortgage loan, it's good to try and figure your mortgage
eligibility factors. Lower credit scores may limit your options and increase your costs of taking out a mortgage. So, if your credit score is below 550, you can almost guarantee that you need to do get that score up before pursuing a home loan. While you may not be able to buy a home
today, you can begin making changes so you can get one as soon as possible.
Improve your credit score
You can read about improving your credit score
, and try to get on the right track. If your score is over 550, you should be able to move forward on the loan pre-qualification process with confidence. If you score is 550 or above, do some research on potential lenders and try to see what the difference is between what you qualify for now and what you might qualify for if you go ahead and continue working on your credit for another 6 months or another year. You might find that you'll save thousands in insurance and other costs if you give things a little time.
It is recommended that you research the mortgage eligibility requirements of at least three potential lenders, including at least one credit union
. Once you are pretty sure you can get prequalified
, pursue the lender that has the most to offer you.