Prequalification

Loan pre-qualification is a tentative decision on the part of a lender to pre-screen a borrower to determine the total loan amount a person can borrow as well as the loan terms they expect. The “pre” part of pre-qualification is important to keep in mind. Until the lender can verify the borrower’s credit worthiness (credit history, income, debt holdings, assets, and employment), any pre-qualification assertion should be viewed with caution. At the same time, a pre-qualification can give a borrower a good gauge to determine their buying power and loan terms while shopping for loans and homes.