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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 me 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, I will collect information about your debt, income, and assets. We’ll then assess your goals for a down payment and get an idea of different loan programs that would work for you. I will then tell you if I was able to pre-qualify you to borrow for a home.

It is important to understand that a pre-qualification is just an estimate of what you are eligible to borrow, not a commitment to lend. Pretty simple, right? This is why most Realtors and/or sellers don’t really care if you are pre-qualified; they want you to be pre-approved. Read on…

Getting pre-approved for a loan gives you competitive advantage when the time comes to bid on a home because you have been pre-approved for a loan for a specified amount.

To get pre-approved, we will complete a mortgage application together and you will then need to provide me with various information verifying your employment, assets and financial status such as W-2 forms, bank records and permission to obtain a credit report. I will then review your mortgage options and submit your application to our automated underwriting system to see which of our loan programs best meets your stated goals and needs. Once the application process is complete, you will receive a pre-approval letter indicating the amount we are willing to lend you for a 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 review your situation and recalculate your mortgage amount accordingly.

Please contact me (info at top and bottom of page) to get a free pre-approval today!

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