Prequalification is generally an early-stage assessment of how much a prospective borrower may be able to finance. The exact meaning varies among lenders.
What It May Be Based On
- Information supplied by the consumer
- Income estimates
- Debt estimates
- Credit information
- Limited documentation
Questions to Ask
- Was my credit reviewed?
- Was income documentation reviewed?
- Were assets reviewed?
- Was automated underwriting used?
- Has an underwriter reviewed the file?
- What conditions remain?
Homebuyer takeaway: Prequalification can be useful early in the process, but buyers preparing to make offers should understand how thoroughly the financing has actually been reviewed.