Prequalify

### What is the primary purpose of prequalifying? - [ ] Binding contract with a lender - [x] Estimating the home price a buyer can afford - [ ] Guaranteeing a loan - [ ] Reducing the buyer's debt loads > **Explanation**: Prequalifying helps estimate the price range of a home that a buyer can afford based on their income and assets, without any guaranteed financing or obligation. ### Does prequalification guarantee you will receive a loan? - [ ] Yes, it is a binding agreement. - [x] No, it is just an estimate. - [ ] Yes, if done with a credible lender. - [ ] Yes, but only for a fixed amount. > **Explanation**: Prequalification does not guarantee any specific loan amount; it is merely an estimate used to guide potential home buyers. ### Which financial details are typically considered during prequalification? - [x] Income and liquid assets - [ ] Employment history and insurance - [ ] Religious affiliation - [ ] Political views > **Explanation**: Prequalification typically considers the individual's income and available liquid assets to estimate possible home affordability. ### Can prequalification affect your credit score? - [ ] Yes, it involves a hard credit inquiry. - [x] No, it generally involves a soft credit inquiry. - [ ] Yes, it involves multiple hard inquiries. - [ ] No, it doesn't involve any credit check at all. > **Explanation**: Prequalification usually involves a soft credit inquiry or none at all, which does not impact the credit score. ### How long does it typically take to get prequalified? - [x] A few minutes to a few hours - [ ] Several days - [ ] A week - [ ] A month or more > **Explanation**: The prequalification process can be quite quick, often taking just a few minutes to a few hours to complete. ### Is prequalification beneficial for first-time homebuyers? - [x] Yes, it helps them understand their price range. - [ ] No, it provides no useful information. - [ ] Yes, but only if they have a high income. - [ ] No, it only complicates the buying process. > **Explanation**: Prequalification is beneficial as it helps first-time homebuyers understand their potential price range for homes based on their financial situation. ### What’s one major difference between prequalification and pre-approval? - [ ] Prequalification is binding; pre-approval is non-binding. - [ ] Prequalification is for sellers; pre-approval is for buyers. - [x] Pre-approval involves a more thorough financial review. - [ ] Pre-approval is mandatory for buying a home. > **Explanation**: Pre-approval entails a thorough financial review, including a credit check and verification of assets, unlike prequalification, which is a preliminary estimate. ### When should you seek prequalification? - [x] Early in the home-buying process - [ ] After closing on a home - [ ] Once you have already decided on a specific property - [ ] Prequalification is not necessary at any stage. > **Explanation**: Seeking prequalification early in the home-buying process gives buyers an idea of their budget and helps streamline their home search. ### Can you get prequalified with multiple lenders? - [x] Yes, to compare potential loan offers - [ ] No, it must be done with only one lender - [ ] Yes, but it will decrease your credit score - [ ] No, it leads to finalizing the loan agreement > **Explanation**: Buyers can obtain prequalification from multiple lenders to compare different loan estimates, although these are non-binding. ### What impact does prequalification have on subsequent steps in the buying process? - [ ] It guarantees loan approval. - [x] It helps guide budget and finance decisions. - [ ] It limits loan options. - [ ] It is required by real estate agents. > **Explanation**: Prequalification helps buyers understand their budget and financing options, thereby guiding their decisions in the subsequent steps of the home-buying process.