Are You Pre-Qualified or Pre-Approved for Your Mortgage

Before you begin to shop for a new home, you should set up a time to meet with me so we can figure out how much you can afford. This will put you in a better position as a buyer. That is 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 will 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.

It is important to understand that this is just an estimate of what you are eligible to borrow, not a commitment to lend. Getting pre-approved for a loan gives you competitive advantage when the time comes to bid on a home because you have been approved for a loan for a specified amount.

To get pre-approved, you will 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. We will review your mortgage options and submit your application to decision it for approval. Once the application process is complete you will receive a Priority Buyer Letter indicating the amount the lender is willing to lend you for your home.

A Priority Buyer 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 review your situation and recalculate your mortgage amount accordingly.