Buying a Home?
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FHA, VA, CONVENTIONAL USDA Loan differences are frerquently changed.
Check with a professional Mortgage Banker before making any commitment.
Pre-Approvals or Pre-Qualifications when buying a home?
The first thing an informed home buyer should do before looking for that perfect home is to identify and quantify mortgage solutions then move forward with the authority, confidence and credibility of a pre-approval. As an experienced Realtor i advise buyers to speak with a lender and get "pre-approved."
This benefits all parties involved by ensuring that prospective buyers can actually qualify for a mortgage on the homes they submit offers on. Frustration and disappointment await any agents or buyers who naively regard today's stringent mortgage process as a minor detail to be addressed after a sales contract is accepted. No one likes surprises during the purchase process!
Two terms that are often (and incorrectly) used interchangeably are "pre-qualified" and "pre-approved". While their exact meanings will vary by lender, in most cases a pre-qualification is far less desirable and less clearly defined than pre-approval.
A Pre-Qualification typically indicates a buyer has spoken with a lender (who may or may not have pulled a credit report) and verbally discussed employment, liabilities, payment histories, and assets. Actual verification of assets, income, and credit may not occur with a pre-qualification, and an automated underwriting system.
Underwriter or Loan Prospector (in most cases) likely has not been run. While better than nothing, a Pre-Qualification remains entirely dependent on a far more thorough process of verification and examination of a borrower's credit, assets, and income. At best, it's a "probably." which will cause much disappointment at the closing table.
A qualified Pre-Approval, on the other hand, entails a stricter assessment of the client's credit, down payment capacity, income, and asset documentation. Credit reports are thoroughly dissected, rather than just credit scores verified. Veteran loan officers run prospective buyers though underwriting engines if they have any doubts concerning debt ratios, derogatory credit items, or employment history/income verification.
Once the system returns an approval, it too needs to be read in detail, as it will list specific requirements for final loan approval. A lender who bases his pre-approval on mere credit scores and underwriting engine approval without fully examining it, risks his reputation and the satisfaction of the other parties involved.
Unfortunately, the ambiguity between Pre-Approvals and Pre-Qualifications can cause mismanaged expectations. Ideally, these issues are caught early enough in the process to address them, if not they can result in extra processing time that delays closing.
If all parties involved are aware of the distinction, it helps everyone play their role to the best of their ability. The listing agent who calls the mortgage originator to ask if the buyer's income and asset docs have been examined clearly understands the differences between pre-qualifications and pre-approvals. Buyers, armed with this information, can request a thorough pre-approval rather than a cursory pre-qualification and play a role in ensuring the best possible handling of their real estate transaction.
4 Seasons Realty, have a list of service providers that can help to resolve credit issues and ensure a successful transaction at the Closing Table.
Call 239 333-2030 or send email for a free preliminary review of your particular credit circumstances and a path to a successful real estate transaction. Get Pre-Aproved NOW!