St George

Importance of Being Pre-Qualified

Purchasing a home is one of the biggest steps you will take in your life.  It can also be a daunting process, but it does not have to be.  The first step and agreeably one of the most important is to be pre-qualified or pre-approved. 

 

Pre-qualification is nothing more than the lender checking your personal and financial information that you have provided in your pre-qualification loan packet and has deemed that you are a good candidate for repaying a loan.  During this process, the lender will take a look at your overall financial and personal picture including your current income and financial obligations to help determine how much you can afford comfortably. 

 

The process of getting pre-qualified is much the same as applying for a loan and acts as a dry-run to the same process.  It may take mere minutes or as much as a few hours and is not the same as a mortgage contract.  It simply tells the lenders if you are or are not a good candidate to pay back the pre-determined amount that the lender assesses you to be able to afford. 

 

Pre-approval, on the other hand, is taking that pre-qualification status to the next level and one step closer to actually signing a mortgage contract.  The process is much the same as a pre-qualification, but the lender issues a letter to you stating that you are approved for a certain amount with a set amount of time to sign a mortgage contract; a loan. 

 

Becoming pre-qualified or pre-approved gives you the advantage of negotiating leverage.  A seller, by knowing that you have been qualified for a loan, will be more likely to take your offer seriously and go through with the sale.  The seller sees the status as a quick sell. 

 

One other advantage of achieving the pre-qualified or pre-approved status is that you will not be tempted to purchase a home that you cannot afford.  Your pre-qualification or pre-approval lending officer has a great advantage of experience in what home buyers can afford and their advice, the amount they qualify or approve you for, is based on that experience along with current economic factors. 

The process is easy.  Contact a lending institution and state that you wish to complete a pre-qualification for mortgage packet.  You will need to have your income information as well as any information regarding your current assets and liabilities.

 

The lender will then verify all of this information by contacting your employer to verify income, your bank to verify average availability of funds and assets, and will then perform a credit history.  This process for the pre-qualification or pre-approval normally does not come with any cost to you, but on the rare occasion that it does, the amount you have paid can be refunded to you when you close on your home loan.
One other advantage of becoming pre-qualified or pre-approved is that it reduces the amount of time it takes to actually get into the home that you have selected.  With a pre-approval, the loan paperwork is essentially complete and closing is your final step.

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