Home Buyers Need to Understand About Getting Pre-Qualified and Pre-Approved For a Mortgage
Posted by Shefali Raghav on
There is an emotional side to buying a home—you're investing in a place you'll make your own, not just through paint and furniture, but the moments you'll spend there. The financial side is equally important—finding a loan that will serve your best interests now and for years to come.
Knowing your price range is an important first step toward a home buying. Pre-qualification and pre-approval are two strategies that can help you determine what a bank may be willing to lend you. While optional, both can help you shop for a new home with the confidence that you are searching in the right range.
One additional advantage of being pre-approved is that you will get a jump-start on your loan application. Many of the documents you submitted pre-approval are the same that will be necessary for your loan application.
The loan amount for which you are pre-qualified or pre-approved for may be higher than what you believe you can afford. You may want to discuss these details with a financial advisor or just carefully evaluate your own budget to determine what you are willing to spend. Remember, a lender is providing you the maximum you may be either “eligible” or “qualified” to borrow— you must decide the price range and payments that make you comfortable.
Now, with an idea of the best mortgage options and a price range, you are ready to find the perfect place to call home. During your search for your home, your loan officer is available every step of the way to answer questions as they arise, clarify your choices and make sure you have everything you need to move forward in the process with confidence.
What is a Pre-Qualification?
- Pre-qualification is an estimate of how much you may qualify to borrow and is based on an initial review of your income, expenses and credit report.
- It's faster than a pre-approval simply because you don't have to wait for an Underwriter to approve your file.
Pre-qualification: Some lenders start with an application; some begin with a conversation. Your credit report may be pulled and you will discuss finances (debt, income and assets) with your loan officer. Your loan officer with then provide you with an estimate for a mortgage for which you may qualify.
What is a Pre-Approval?
- Pre-approval is completed by an Underwriter who reviews the required documentation and will pre-approve you for a mortgage that is based on a full credit approval.
- Pre-approval provides you with a better idea of the likelihood that you will be approved for a mortgage as the information you've provided has been verified.
Pre-approval: Your lender takes a much closer look at your financials. You supply documents such as tax returns, W-2s, pay stubs and account statements, and authorize a credit check. An underwriter reviews everything except a property appraisal and will pre-approve you for a mortgage at an amount that is based on a full credit approval. A pre-approval can speed up the process of obtaining the final approval once you sign a purchase contract. Note: Equity Prime Mortgage does not charge for a pre-approval; however, some lenders may charge a fee.
We offer complimentary, no obligation pre-qualification and pre-approval anytime, and can provide support as you make a plan to purchase a home. To get started, log on today to equityprime.com/prequalify or you can even do it over the phone.