Home Loan Pre-Qualification vs. Pre-Approval

While shopping for a home loan, brokers and lenders will offer to pre-qualification or pre-approved for a mortgage. Home loan pre-qualification and pre-approval processes are different and distinct, so it's important for you to understand the difference.

Pre-qualified

A loan officer or loan processor working for a mortgage lender or broker you can usually pre-qualify for a home loan within an hour. As pre-qualified for a home loan is a good first step, which will let you know if it is necessary to pre-approval process. To get pre-qualified will need to complete a mortgage application and allow the broker or lender to pull your credit. We will review the loan application and credit, and let your know if they are pre-qualified.

Pre-approved

Only a mortgage underwriter can pre-approved for a home loan, loan officers and processors can not. Typically mortgage brokers do not have underwriters on staff, so they typically can not pre-approve your home loan. A valid pre-approval is the best tool you can have when shopping for a new home. The key is to ensure that it is valid. A valid pre-approval has been signed by an authorized underwriter (an underwriter is the person that tells you your final loan is approved). If an underwriter pre-approve your loan application Home in advance, all you have to do is find the house you want, have him evaluated, and then you should be able to close within days. Some mortgage brokers and lenders will issue pre-approval that were not examined by an authorized underwriter, be sure to ask.

To get pre-approved for a home loan, you must provide the underwriter with your income and documentation of activities (W2, bank statements, etc..) The underwriter will review the credit, mortgage application, documentation, and then approve you for a loan amount set and property value. Once you have been pre-approved for a home loan you are ready to start shopping. The process typically takes a couple of days.

Knowing exactly what type of home loan you can get will allow you to shop and negotiate with confidence. For example, you can inform the seller that you are pre-approved for a loan and are willing to close next week. If the seller needs to close quickly, no matter if there is another buyer who can not quit for weeks or months. Also, sellers do not like taking their properties off the market for long periods of time. The ability to quickly close is a way to obtain a great ....