Many people do not understand the difference between getting pre-qualified and getting pre-approved for a mortgage.
What is loan pre-qualification?
Loan pre-qualification is an estimate of how much mortgage payment you can afford. It is based upon the information you provide verbally. No credit report is pulled, and the information you provide will not be verified as part of the pre-qualification process.
What is loan pre-approval?
Loan pre-approval is a formal process in which the mortgage company completes the entire process of obtaining a full loan approval, except for ordering the appraisal and performing a title search. A complete loan application is taken, and your credit report will be obtained to evaluate your payment history and your credit scores. Your income documentation will be evaluated, and statements from savings and investment accounts will be requested to verify that you have sufficient money to cover the down payment, closing costs, and meet the reserves requirements for the loan program you are applying for. Your loan file may also be run through an automated underwriting engine to determine eligibility for certain types of mortgage programs.
The benefits of loan pre-approval
If you have been pre-approved for a loan, you can shop for a home with assurance because you won’t be going through the whole process worrying about whether your mortgage will be approved. You will also be issued a Loan Pre-Approval Letter, which you should place right on top of any offer that you make on a property. Sellers will be more inclined to accept your offer if they know that your loan has been pre-approved.
What is the next step?
To get pre-approved for a home loan, call Lenderline at 1-888-661-7888, or apply online.