Are You Pre-Qualified or Pre-Approved for a Loan:

Before you begin to shop for a new home, you should set up a time to meet with us 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, we 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. I will issue you a pre-qualification letter indicating the amount you are pre-qualified to borrow.

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.

Getting pre-qualified for a loan gives you competitive advantage when the time comes to “putting an offer in” on a home because it lets the seller and realtor know you have already had an initial review of your documenation. The pre-qualification letter gives them an estimate as to what you are able to purchase and afford. A pre-approval is a more detailed process, running your information through a specific lender for an approval contingent upon them physically reviewing and verifiying the information you are providing. Most realtors require one of the letters so they can better determine which properties to show you.

To get pre-approved, you will complete a mortgage application and provide us with various information verifying your employment, assets and financial status such as W-2 forms, bank records and credit card statements. We’ll review your mortgage options and submit your application to the lender that best meets your needs. Once the application process is complete you will receive a pre-approval letter through one of the lenders we work with indicating the amount they are willing to lend you for a new home.

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, your lender must re-evaluate your situation and recalculate your mortgage amount accordingly.