Pre-qualification

Pre-qualification means that a loan officer has taken some information from the borrower, but not verified any of it. With a pre-qualification, the borrower typically has not stated their social security number, so it is not possible to check credit. A borrower will give their employment, income and asset information and the amount of current monthly debt. In addition a borrower is asked about their general credit worthiness. Based on this quick work up the borrower will be told that they pre-qualify for a certain loan amount. For example, if the borrower makes $15/h or $2600/month this is then calculated to an industry-standard 36% debt to income. So if a borrower makes $2600/month they would be pre-qualified at a total debt of $936 (this includes any monthly payments, including car & credit card min. amount; along with the proposed housing payment of principal, interest, taxes and insurance)