- Be a Savy Buyer!
Pre-Qualification VS Pre-Approval?
What difference does this make to you as the buyer?
A pre-qualification letter is an opinion, typically offered by a loan officer based upon
information usually given to the loan officer verbally. Often the information is not
verified and most of the pre-qualification letters have a statement like this:
“This opinion is subject to the information provided being verified, including income,
assets and/or credit.”
On the other hand, a pre-approval is a loan commitment. It is a loan approval that is based upon
documentation submitted during the application process and underwritten by someone who has
underwriting authority. The “pre” merely means that the applicant has not purchased a home yet.
Therefore, the commitment will be subject to these conditions:
A sales contract on a property
The appraisal of that property
Final selection of a loan program and locking in a rate
In addition, all loan approval or commitments will have standard conditions such as a clear title
and hazard insurance.
I recommend that buyers start the home buying process by meeting with a loan officer
at either a bank or a mortgage brokerage firm. During this preliminary meeting, the buyers
can ask a lot of questions and get a lot of answers. The most important question is, “What price
range home should I be shopping for?” To answer this, the lending professional will need to
know a few key things:
I highly recommend Nonie Velez, a lending professional from American Family Funding (a direct lender).She is superb at what she does and responds back to you VERY quickly! You can reach her at:Nonei Velez
Your household income, assets & liabilities
Your FICO scores (credit scores) – with your permission, they can get this info
Figure out the maximum monthly payment you can afford and are comfortable with paying.
This will include the principal, interest, taxes and insurance.
Using the previous info…they can determine a list price range for you to give your agent.
Now the lending pro can provide you with a “Pre-Approval” letter based on the information
they have obtained. This letter can be submitted WITH the offer on the home that you select!
Now you can shop with confidence, knowing what price range you are qualified for and
what the total monthly commitment will be.