Mortgage qualifying or what is also know as prequalification is when the borrower provides information about their income, assets, credit, debts, etc. to the mortgage originator. They or a computer analyze all the information and decide if the borrower can be approved for the mortgage they are applying.

Mortgage Qualifying Definition

Qualifying mortgage loan rules have certainly changed. In the old days, mortgage originators had to analyze your credit, calculate your mortgage ratios, and make sure the results fit into your loan program. This was all done by hand.

The only way you would really know is after an actual underwriter saw the file and rendered their decision. It was quite a bit of pressure on the mortgage originator to be right and come up with the same decision as the underwriter.

Now, there are automated underwriting computers that do the work for the originator. The same information is input and the computer spits out an approval. This isn’t even a pre-approval, it is an actual approval. It is the exact same approval the underwriter will use to approve your loan.

And, it used to be if your mortgage qualifying ratios did not fit into the guidelines, you got denied. Now, all things are taken into consideration when the computer gives its decision.

The underwriter make sure all documentation is correct and in the file. It takes all the guess work out of the qualifying process. Qualifying FHA loans are also done this way. Eventually, some time during the process your mortgage will be run through a computer for approval.

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