Mortgage Pre-Qualification or Mortgage Pre-Approval. What’s the Difference for King of Prussia, Plymouth Meeting, Phoenixville PA Home Buyers?
Before you ever begin to shop for a new home...
You should set up a time to meet with a mortgage lender so together you can determine out how much you can afford. This will put you in a better position as a home buyer. Imagine making an offer on a home. It get's accepted only to find out you cannot afford to buy it. Embarrassing to say the least. First, if you are working with a professional real estate agent, making an offer would not be an option unless you were pre-qualified or pre-approved.
It is important to understand the distinction between being pre-qualified for a mortgage loan and pre-approved for a mortgage loan. The difference between the two terms will be crucial when you decide to make an offer on a house. Being pre-approved gives more weight and instant credibility.
To get pre-qualified for a loan, a lender will collect basic information about your debt, income, and assets. This is generally done over the phone. They'll ask about your credit profile (not run a credit report) and assess goals for a down payment and get an idea of different loan programs that might work for you. The lender will then issue you a pre-qualification letter indicating the amount you are pre-qualified to borrow. There is typically NO COST OR OBLIGATION to get a pre-qualification. THE problem with a simple pre-qualification is that it's not worth the paper it's printed on. It's simply based on unverified numbers and no credit score review.
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 provides you a 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, you will complete a mortgage application and provide various information verifying your employment, assets and financial status such as W-2 forms, bank records and credit card statements. The mortgage lender will review your mortgage options and submit your application to underwriting. Once the application process is complete you will receive a pre-approval letter indicating the amount that you are approved to borrower so you can purchase your next new home.
FYI, a pre-approval letter is not entirely binding on the lender; it is subject to an appraisal
of the home you wish to purchase and certain other conditions (clear title, etc.). If your financial situation changes (e.g. you lose your job), interest rates rise greatly or a specified expiration date passes, an underwriter will need to review your situation and recalculate your mortgage amount accordingly.
NOTE: The more complete the documentation you provide upfront to your lender, the more likely your mortgage application process will go smoothly. If you delay providing the documents requested, it could also delay your closing. So do not delay and turn around the requested documentation as soon as possible.
Need a Pre-Approval? My team and I are here to help. Click I Want To Be Pre-approved : There are no upfront fees or obligation
Senior Loan Consultant
Meridian Bank - NMLS #126036
920 Germantown Pike, Suite 102 | Plymouth Meeting, PA 19462 | t: 610.739.6563 | f: 610.351.7810 |www.JoeGonzalez.net
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For help or questions contact:
Senior Loan Consultant - NMLS #126036
GMH Mortgage Services, LLC
625 W. Ridge Pike, Building C, Suite 100 | Conshohocken, PA 19428 | Direct: 610-355-8039 | Cell: 610-739-6563