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 Are you pre-qualified or pre-approved for a loan?
The difference between the two terms will be crucial when you decide to make an offer on a house. Today you must be pre-approved for your mortgage before you can put an offer on a house. No longer are sellers accepting an offer for a buyer that has just been pre-qualified or, worse yet, has not started the mortgage process.
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-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 for a loan, you will provide me with various information verifying your employment, assets and financial status such as W-2 forms, pay stubs and bank records. Well 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. Then, I will issue you a pre-approval letter indicating the amount you are pre-qualified to borrow.
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.
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Licensed Mortgage Banker NJ Department of Banking and Insurance; Licensed by the Pennsylvania Department of Banking