Pre-Qualified or Pre-Approved?

There is a vast difference between being pre-qualified and pre-approved for a mortgage loan.  Pre-qualifying is usually handled over the phone.  You supply asset information so the loan officer can determine:  approximately how much home you can afford, what your down payment will be, what your monthly payment will be, the loan programs you qualify for, and alternatives and strategies to help you buy the home of your dreams.   

Pre-approval goes one step further.  It involves complete verification of asset, credit and employment information.  The lender will then issue a full credit loan approval.  At this point you will know exactly the maximum loan amount and exactly what loan program or programs for which you have been approved – this approval is good for a limited amount of time (varies by lender).  The pre-approval process can be going on while you are looking for your new home.  Pre-approval normally shortens the time from contract to closing as the only other conditions (appraisal, inspection, title insurance, survey) can be complete in 1-3 weeks.  Having a pre-approved loan usually strengthens your negotiating position as the Buyer since the Seller doesn’t have to be concerned with your ability to qualify for a loan.

Choosing a Lender

Choosing a lender is an important decision.  You will want to choose a loan officer immediately to confirm how much house you can afford and to discover any special circumstances that might pertain to your particular situation.  This is the pre-qualification and there is no cost to my clients for this service.  I suggest that you use a lender that comes highly recommended

According to the Federal Trade Commission’s Bureau of Consumer Protection, the information contained in credit reports is now the top source of consumer complaints.  Below are the phone numbers for the three largest credit reporting agencies.  I recommend you review your credit file from time to time to ensure its accuracy.