When shopping for a home it always a good idea to check in with your mortgage lender and make sure that obtaining a mortgage for a property will be possible. Making sure there are no mistakes on your credit report and that income, debts and assets are in line is a crucial step to purchasing a home. Many home buyers hear that they should get “preapproved” or “prequalified” but often do not know exactly what the differences are between these terms, what exactly each entails or which one they should actually be seeking.
A pre-qualification is a simple review of a borrower’s credit, income and assets by a loan officer to determine if everything is on the right track and a mortgage approval is likely. Because these reviews are done only by the loan officer, the weight that these pre-qualifications carry is dependent on exactly how thorough this individual loan officer is with his review. The quality of the pre-qualification will vary with the quality of the loan officer. Depending on the experience of the loan officer and how well they reviewed the information, completely affects the quality of your pre-qualification. Uh oh, that can be dicey and lead to unexpected potholes down the road.
A pre-approval is something entirely different. When obtaining a pre-approval, the borrower will provide a complete application with documented assets, income and credit. This pre-approval will be processed and run through underwriting channels in order to issue a firm mortgage commitiment. A pre-approval is essentially a full approval subject to standard property conditions such as appraised value and a title search. A pre-approval allows the home buyer to shop with confidence knowing that any potential financial issues that would stand in the way of their home purchase have already been flushed out, dealt with and overcome. A pre-approval also allows for a quicker and easier closing, as the only issues needed for completion before closing are the approval of the property itself with the typical appraisal, title search, pest inspections, flood certifications, etc.
When shopping for a mortgage in Pennsylvania, always make sure you obtain a pre-approval and not just a pre-qualification.
For your free pre-approval in Pennsylvania, give me a call.