Getting a pre-qualification means that your lender has a general idea about your income level, assets, debt and credit and estimated what you can afford.It is very important as a buyer to decide how much you want to spend on a purchase and what sort of down payment you are willing to make before contacting your lender for a prequalification letter
Why get prequalified and then preapproved for a mortgage before you begin your search for a home? Because there are 3 people who will benefit from your preapproval: You, your Agent, and the seller from whom you eventually buy a home!
A pre approval prior to finding a home can give you more leverage. When several buyers are looking to make offers on the same home at the same time the one that is already been pre approved will be looked at more seriously than the offers that do not come with pre approval.
Pre-Qualification
Based on information given and Credit Pull usually done is 5 - 10 minutes once all documents are received. Documents are usually W-2's, tax returns, pay stubs, or financial statements. Than the Credit Pull is a Tri-Merge Credit Report from all three agencies. Once the information is received or given over the phone or person a Pre-Qualification can be determined from that minimal information alone. The Tri-Merge report is the key to this Qualification.
720 + No problem can qualify off Tri-Merge report up to $500,000
680 - 719 Tri-Merge Report and minimal documentation
679-620 Tri-Merge Report and financial documentation
620 and Under Tri Merge Report and Copies of Financial Documentation. Contact your Mortgage Professional to get you and your family started today.
Pre-Qualification is not a loan approval. A loan approval clearly states which lender your loan is approved by, the type of loan program and interest rate details are clearly stated.
Normally to get a loan approval or loan commitment from a lender, your credit and loan details must be analyzed through an automated loan underwriting engine by the lender. As long as the details you have submitted can be proven on the final loan submission and the property appraisal review is acceptable, the loan can be funded.
Want to strengthen your bargaining position? Get prequalified. Want your offer to stand out in a case of multiple offers for the same house? Get prequalified. Look at it from the seller's perspective. If you had 2 offers on the table for your house, one from a fully prequalified buyer and the other from an "I'll get around to that soon" buyer--to which offer would you devote the most attention? Even if the prequalified buyer's offer was $1000 less, would you take the chance on the buyer that perhaps may not be qualified? When it comes to a seller evaluating offers, "a bird in the hand..." definitely applies.
You very first step in the loan process is the pre-qualification. This can be done in record speed now with the internet and online forms that most Brokers have on their website. These forms are safe and secure and you find out in minutes what amount you are pre-qualified for. You next step from there would be getting pre-approved where the right lender and right program for your situation is selected.
Prequalification's are normally done with verbal verifications most of the time and have little to no legal enforcement. Many realtors are now trained to ignore or discourage sellers from doing business with prequalified borrowers. They instruct them to only deal with conditional commitments because they have legal weight to be enforceable in most states once they are issued by the lender or bank.
By knowing what your financial parameters are, your Agent can spend more time looking for houses that "fit" and less time pursuing dead ends. No matter how much you might want a 4000 square foot home for $275,000, if your qualifications say $125,000, your qualifications say $125,000. When it comes to mortgages, "yes, but" doesn't carry much weight!
Also, usually a realtor does not even like to show houses to someone that does not already have a pre-qualification letter.
You should always get pre approved before you start looking for a home.
With a pre approval, you know exactly what you can afford and save a lot of time by not shopping for homes out of your price range.
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