There are several ways to shop for a mortgage. You can approach bank
lenders and mortgage companies directly; you might ask people you trust
for recommendations. You can inquire through the growing number of
online lenders, like Quicken Loans or Guaranteed Rate. Or you can go
through a mortgage broker, who will tap a network of lenders to find
loan options for you. It is always wise to consult with more than one
lender to find the best deal.
What Is Pre-qualification and Pre-approval?
These terms can mean different things to different lenders, so always
ask when applying.
In general, a pre-qualification is a lender’s initial assessment of how
much of a loan you are likely to qualify for, usually based on your
answers to questions about income and assets. This is often done over
the phone or by filling out an online form.
A pre-approval is a firmer guarantee of a loan, as it involves a more
thorough assessment and verification of your finances, including a
credit check. It may require a small fee.
Getting pre-approved before house hunting can give you more confidence
about what you can afford, and lessen the likelihood of rejection once
you have formally applied for a loan. In competitive housing markets,
sellers may not consider offers from buyers who don’t have proof of
pre-approval.
Can I Get a Mortgage if I Have Bad Credit?
It is possible, though not easy, to get a mortgage if you have a low
FICO score (mid-600s and below). Some lenders make allowances for
borrowers with lower credit scores, depending on the circumstances.
However, interest rates are higher on such loans, considered to be at
greater risk of default. To get a more competitive rate, you might
consider taking the time to improve your credit before buying a home.
For more information on buying a home, check out the Consumer Financial
Protection Bureau’s detailed online guide,
Owning a Home.
