What You Need to Know Before Buying a Home

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Before diving into the world of homeownership, one of the most important early steps is getting pre-qualified for a mortgage. Whether you’re a first-time buyer or re-entering the market, pre-qualification offers a clear picture of what you can afford and helps you prepare for a smoother, more informed homebuying journey.

At Miranda Mortgage in Denver, we guide our clients through this essential process with honesty, clarity, and a commitment to education. Here’s what you need to know about pre-qualifying for a mortgage and how to set yourself up for success—especially if your credit isn’t perfect.

What Is Pre-Qualification?

Pre-qualification is an initial assessment of your financial situation to estimate how much you may be able to borrow. It involves a high-level review of your income, debts, credit, and savings to help determine an affordable price range for purchasing a home.

It’s important to distinguish between pre-qualification and pre-approval. While pre-qualification provides an estimate based on unverified information, pre-approval involves a more in-depth review of your credit report, employment, and financial documents. Pre-qualification is a great starting point; pre-approval is the next step when you’re ready to make an offer.

Why Is Pre-Qualification Important?

Getting pre-qualified before house hunting can provide several advantages:

• You’ll understand how much you can reasonably afford.
• You’ll uncover credit or financial issues early, with time to fix them before applying.
• You’ll be seen as a serious buyer when making offers.
• You’ll receive tailored advice and an action plan to improve your financial readiness, if needed.

This process is particularly helpful for borrowers who may not be ready to buy just yet but want to create a plan for future homeownership.

How the Pre-Qualification Process Works

At Miranda Mortgage, we make the pre-qualification process straightforward and approachable. Here’s how it typically works:

1. Initial Conversation: We talk with you about your homeownership goals and collect basic financial details, such as income, debts, and savings.
2. Credit Review: If you’re comfortable, we’ll check your credit report to understand your score and any existing issues.
3. Affordability Estimate: Based on your financial profile, we’ll provide an estimated loan amount and monthly payment range.
4. Pre-Qualification Letter: If you qualify, we’ll issue a letter you can use when shopping for homes, giving you an edge in competitive markets.

We’re here to answer your questions and offer guidance every step of the way.

Pre-Qualifying with Bad Credit

If your credit is less than ideal, don’t worry—pre-qualification can still be incredibly useful. Rather than a hard yes or no, pre-qualifying with bad credit often results in a custom action plan. Our goal is to identify the steps you can take to become mortgage-ready in the near future.

For example, we may advise paying down high credit card balances, avoiding any late payments, and removing disputes from your credit report. These actions can significantly improve your eligibility in as little as six months.

Here are some general FHA loan guidelines to keep in mind:

• No late payments in the past 12 months.
• No more than two 60-day late payments on installment or mortgage loans within the past 24 months.
• Demonstrated savings and reasonable debt-to-income ratios.

By understanding these benchmarks, borrowers with lower scores can begin working toward homeownership with realistic expectations.

What Lenders and Underwriters Look For

When evaluating your pre-qualification, lenders and underwriters examine several key aspects of your financial profile:

• Credit history: A consistent record of on-time payments is essential. Late payments, recent collections, or unresolved disputes can be red flags.
• Rent history: Proof of timely rent payments helps show you can manage a monthly housing expense.
• Savings behavior: Underwriters want to see that you can save and manage your finances responsibly.
• Income stability: Your income should be stable and sufficient to cover your mortgage and other debts.

Pre-qualification doesn’t guarantee approval, but it does provide a valuable window into what underwriters will eventually evaluate.

Avoiding Common Pitfalls

Here are a few common mistakes to avoid when preparing to pre-qualify:

• Late or missed payments: These can drop your score quickly and hurt your chances of qualifying.
• Unresolved disputes on credit reports: These should be removed before you apply.
• Not saving for a down payment or closing costs: Even if you qualify for a low down payment program, you’ll likely need some funds set aside.
• Taking on new debt before applying: This can change your debt-to-income ratio and impact your eligibility.

By addressing these issues early, you’ll improve your odds of pre-qualifying and eventually securing a mortgage that fits your needs.

What Happens After Pre-Qualification?

Once you’re pre-qualified, you can begin house hunting with a clear understanding of your price range. When you’re ready to make an offer, the next step is moving into pre-approval, where we’ll collect documentation like pay stubs, tax returns, and bank statements to formally evaluate your loan eligibility.

A pre-qualification letter gives you credibility with sellers, but a pre-approval takes things further, helping you compete more effectively in a hot market.

Why Choose Miranda Mortgage?

At Miranda Mortgage in Denver, we don’t believe in one-size-fits-all advice. Our team is here to listen, strategize, and guide you through your journey—especially if you’re navigating credit challenges or unsure where to start.

We take pride in educating our clients and helping them take meaningful steps toward homeownership. Whether you’re ready now or preparing for the future, we’ll walk beside you with expert advice and no pressure.

Start Your Pre-Qualification Today

If you’re considering buying a home, don’t wait to start the conversation. Pre-qualification is quick, free, and one of the smartest things you can do to prepare.

Contact us today at 303.520.1786 or email Naiely@BarrettFinancial.com to schedule your consultation. Let’s build your roadmap to homeownership—starting right here in Denver.