Are you pre-qualified or pre-approved for a loan?

Before you begin to shop for a new home, you should set up a time to meet with me so we can figure out how much you can afford. This will put you in a better position as a buyer. Many believe that they need to be pre-approved but it is important to understand the distinction between being pre-qualified versus being pre-approved for a loan.

To get pre-qualified for a loan, I will collect information about your debt, income, and assets. We’ll look at your credit profile, desired down payment and get an idea of different loan programs that would work for you. At the time you extend an offer on a home, I will issue you a pre-qualification letter indicating the amount you are pre-qualified for. This is standardly required by the Realtors to accompany the offer. It is important to understand that a pre-qualification letter is just an estimate of what you are eligible to borrow, not a commitment to lend.

To get pre-approved, you will complete a mortgage application and provide me with various information verifying your employment, assets and financial status such as W-2 forms and bank records. We’ll review your mortgage options and submit your application to underwriting department. Once the application process is complete you will receive a pre-approval letter indicating the amount your lender is willing to lend you for your home. This process is not usually required unless there are special circumstances that require additional review prior to putting in an offer.

Both of these are still subject to an appraisal of the home you wish to purchase and certain other conditions. If your financial situation changes (e.g. you lose your job), interest rates rise or a specified expiration date passes, we must review your situation and recalculate your mortgage amount accordingly.

Contact me today to get pre-qualified!