Before you house hunt, get pre-qualified for a mortgage

October 30th, 2019

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If you’re house hunting, you’ll want to get pre-qualified for a mortgage before you visit your first open house. It will help narrow your house hunt and put you in a better bargaining position when you find a home you love.

What is pre-qualification?

The terms pre-qualification and pre-approval are often used interchangeably, but they are different. A pre-qualification means that based on the information you provide, a lender believes you are a good candidate for a loan. Pre-qualification gives you, the home buyer, an idea of how much you can borrow based on income, employment, credit, and bank account information.

Pre-approval is when a borrower submits a loan application and provides financial information to be reviewed for loan approval. The information is analyzed by an underwriter and a written commitment is provided.

Why should I get pre-qualified?

Pre-qualification will provide answers to a lot of questions that will help in your house hunt. It will also put you in a better bargaining position when you find a home. Here’s what you can expect to learn:

How much loan you can afford and what your monthly payment would be.

How much of a down payment you’ll need — and if you even need a down payment. Some loan programs — such as Veterans Administration and Rural Development loans — do not require a down payment. Others may require between 3 and 5 percent down. “There are a lot of people who think they need to have 20 percent down to buy a home, but that’s not the case,” said Ryan Niesent, a regional mortgage manager at First Interstate.

What loan programs are available to you. In addition to conventional, VA, Rural Development and FHA loans, every state has a first-time homebuyer program. And there may be other assistance programs through your local community. “Getting prequalified allows for that potential home buyer to know the details of the first-time homebuyer program, which may offer a reduced interest rate or assistance for down payment and closing costs,” Niesent said.

What to expect in closing costs. When placing an offer on a house, it’s pretty common for a buyer to ask the seller to pay their closing costs. Because pre-qualification gives you an idea of what closing costs may be, your realtor can write a more sophisticated offer, Niesent said. In today’s competitive real estate market, an offer from a buyer who has been pre-qualification letter attached is taken more seriously. “The offer carries more meaning to the seller,” Niesent said. “They know you’ve been to the bank, they know that you’re pre-qualified.”

When should you get pre-qualified?

Before you even start looking at houses. That way your Realtor can narrow your search to exactly what you want and can afford.

“That’s important because if you qualify for a $225,000 house, but the Realtor is showing you $325,000 houses, obviously those houses aren’t going to be comparable,” Niesent said.

Knowing what loan programs are available to you will also help your Realtor find the right house for you as some loan programs fit best with certain types of properties. And once you’re pre-qualified, it’s easy for a lender to run scenarios for you if you find a home you like.

How do I get pre-qualified?

Contact one of First Interstate’s mortgage loan originators. The process can take as little as 10 minutes and can be done in person or by phone. You can also pre-qualify easily online at

How long does pre-qualification last?

If you’re pre-qualified, First Interstate will provide you with a pre-qualification letter that’s good for 60 days. If you’re not yet ready to apply for a loan at 60 days, we can update the letter with updated information.