Buying a home is a necessity. But you have to determine your capacity to afford one. Your capacity to buy a home depends on several factors.

You have to calculate the price of the home you can afford by assessing your financial situation. You have to carefully go through the guidelines that will enumerate the factors needed, for you to qualify for a mortgage. It helps to use a pre-qualification mortgage calculator to determine the size of the mortgage loan.

You can then scout for a local or a national mortgage lender and check if you pre-qualify for a mortgage. With the help of your financial information the lender can determine the best mortgage for you. For the pre-qualification process the lender will need to assess your financial situation by computing your housing and debt ratios and other underwriting norms.

Pre-qualification is an assurance by the lender given in form of a letter or a certificate specifying the maximum amount of loan you can qualify for. This is done after going through your credit history, property appraisal, verification of your income and job evaluation. The lender helps you assess the right price range for a mortgage loan without actually having to offer you a loan. Some pre-qualification assessments help you evaluate your credit history.

Pre-qualification does not usually carry a fee. It is often good to pre-qualify before you send in an application for a home loan. There are four main reasons for pre-qualification:

• You can save thousands of dollars when you are negotiating with a property seller when you pre-qualify.
• Buyers who are pre-qualified are given preference over others in multiple offer situations.
• You need to pre-qualify to get real estate agents to work with you.
• Pre-qualification will help you apply for a loan within the correct price range.

Pre-qualification letter

A lender may give you a pre-qualification letter but neither of you are compelled to do business with the other. Helping you pre-qualify gives the lender an opportunity to advertise his services.

Pre-qualify for a mortgage online

You can pre-qualify online through several lenders. Using the net you can get a list of brokers and lenders who offer their services to pre-qualify online.

Once you are pre-qualified and have sent in your application, inquire with the lender the time it will take to grant you the loan. If you have decided on purchasing a home it will help you to settle on the precise closing date.