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 Are you pre-qualified or pre-approved for a loan?
Before you begin to shop for a new home, we should meet, or at least talk so we can figure out how much you can afford. This will put you in a better position as a buyer. That’s when it is important to understand the distinction between being pre-qualified for a loan and pre-approved for a loan. The difference between the two terms will be crucial when you decide to make an offer on a house.
To get pre-qualified for a loan, I will collect information about your debt, income, and assets. We’ll look at your credit profile and assess goals for a down payment and get an idea of different loan programs that would work for you. After this process is complete, I can issue you a prequalification letter when you're ready to make an 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. A prequalification is based on information you tell me, but that is not necessarily validated with pay stubs, bank statements, etc.
Getting pre-approved for a loan gives you competitive advantage when the time comes to make an offer on a home because you have been approved for a loan for a specified amount.
To get pre-approved, you will need to complete a mortgage application and provide me with various information verifying your employment, assets and financial status such as W-2 forms, bank records and credit card statements. I can usually issue you a pre-approval letter within a few hours (or less) of receiving all your paperwork. NOTE: I do not issue pre-approval letters until I know how much you are prepared to offer for a property. That amount is what I will indicate on your pre-approval. You don't really want the seller to know you can afford to pay more, do you?
A pre-approval letter is not binding on the lender; it is 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 have to review your situation and recalculate your mortgage amount accordingly.
In this current lending environment of volatile mortgage rates, be aware that your rate is subject to change constantly until your rate is actually locked with the lender.
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