Understanding What Pre-Approval & Pre-Qualification Is!

 

Your first move in the homebuying process should always be to speak to a top mortgage lender in your area, regardless of how far in advance you plan.

A lender can tell you which houses are in your price range and how long it will take you to buy a house before you start looking at homes. You can obtain pre-approval for a mortgage from your lender after you've been pre-qualified.

Both steps will help you get closer to making an offer on a new home and can make a difference when you're ready to make an offer.

What is pre-qualification?

The best way to determine if you're qualified for a home loan is by getting pre-qualified.

Why? Pre-qualification is free and easy.

An estimated loan amount is provided to you based upon basic qualifying information and general lending standards when you are prequalified. It provides you with a range of possible home prices.

To pre-qualify, simply provide your income information to a lender. They will ask you about your income and credit history, but they won't ask you for any documents. As well as asking about your price range, they will also ask what type of house you are looking for.

Prequalification allows home buyers to develop a realistic budget. Real estate agents will typically ask you that question as well: “How much can you afford?" When a buyer requests one before viewing a home, a real estate agent typically keeps a copy of the pre-qualification letter on file.

Pre-qualifying for a much larger mortgage than your budget is a good thing. If that occurs, it means that you are avoiding overextending. Just because you qualify for a larger mortgage doesn't mean you should look for a home at the very top end of your qualification budget. 

The pre-qualification process will also give you an idea of your monthly payment. It's important to note that pre-qualification is the first step, while pre-approval takes a little longer. Contact the best mortgage companies if you are looking for a pre-qualification process for your home loan.

What is pre-approval?

You will have to fill out an application with a lending institution, which usually requires more paperwork. The top mortgage lender will run a thorough check on your income, any debt you may have, your credit history, and an asset check. They will also request recent paychecks, bank statements, and tax statements. It could take up to a couple of weeks to find out how much money you're approved for.

You will receive a pre-approval letter from your lender after receiving your pre-approval amount. The pre-approval letter does not constitute a loan commitment.

A buyer with a pre-approval letter in hand has an advantage in the market. If you find a house you like and it's within your budget range, you can make an offer with confidence. Some sellers may even require a pre-approval letter before letting you tour their house.

In the end, it's best to have a letter outlining the range of home loans you qualify for. This doesn't mean you'll receive a loan that you are pre-approved and eligible for, only that it will be more likely.

Qualifying for a Loan

When you qualify for the loan and when you have to secure it, circumstances can change. The loan is only secured after you apply.

To make the loan process as simple and quick as possible, it's best to return to the top mortgage lenders who worked with you for your preapproval letter.

It's a good idea to ask the lender why you weren't approved for the loan you expected, or you were pre-approved for less than what you expected. Loan officers can explain how pre-approval and pre-qualification work and how they are determined. 

Speak to your lender to find out how your credit score can be raised if it is too low. Ensure that the information on the lender's credit report is accurate by requesting a copy. If you have a similar name or address to someone in your family, it may impact your credit report. Act quickly to have mistakes corrected.

The best way to start the homebuying process is to speak with the best mortgage companies. A relationship with a lender is an essential first step to pre-qualification, pre-approval, and ultimately a loan.

If you are looking for a mortgage company, contact PierPoint Mortgage and they will help you to get the loan. They have been in this mortgage industry for more than 50 years and can provide you best loan services.