Are you pre-qualified for a loan?
BEFORE you begin shopping for a new home, you should set up a time to meet with someone so you can figure out how much of a loan you can afford. This will put you in a better position as a buyer when negotiating a contract. It is important to understand the distinction of what being pre-qualified, pre-approved, and a conditional loan approval means. In the past there have been different terms used with varying meanings. There are primarily 3 different options available to you, and not all companies do all of these options. Banks will generally offer you the first option, and lenders will offer you the first and second option. Only a true Broker and will be able to offer you all three options below. Our company is a true Broker, just in case you were wondering. Check out the Home Page Button entitled "Mortgage Broker vs. Banker" for further information.
To get pre-qualified for a loan, we collect your verbal information about your debt, income, and assets. We’ll access your credit report profile and assess goals for a down payment and give you an idea of the different loan programs that would work for you. You do not need to give any documentation to verify the income and assets. We issue you a pre-qualification letter indicating the amount you are pre-qualified to borrow. This is a quick assessment of what you may qualify for, but by no means does it assure you of any hint of whether you could be approved for a loan. The last thing you want to do is go through all the searching for a home, writing of a contract, paying for inspections and appraisals, only to find there are problems once we review your actual documentation of income, tax returns, and asset information. It is telling your Realtor "My best guess is they may qualify for a loan". Make sure you ask for a copy of your credit report.
To get pre-approved, you will complete a mortgage application and provide us with various documentation such as pay stubs, tax returns, W-2's, 1099's, assets, bank statements, and other documentation, depending on your financial situation. We’ll analyze your documentation, access your credit profile, research loan program guidelines and rates, and submit your application to an electronic Desktop Underwriting system for a preliminary pre-approval. Once the application process is complete you will receive a pre-approval letter indicating the amount and type of loan you have been pre-approved to purchase. Again, this is not a commitment for a mortgage loan. Make sure you receive a copy of your Desktop Underwriting pre-approval, and a copy of your credit.
Conditional Loan Approval:
This is where we take the pre-approval to the next level. We send your signed loan application, disclosures, and documentation to the pre-determined lender, based on guidelines and rates, with a "To Be Determined" address of a property in the future. The lender underwrites the file and sends us a Conditional Loan Approval, based on your file. The conditional loan approval essentially means that you, the borrower are acceptable to underwriting guidelines, but they still need a property, appraisal and title work to move forward with a final approval. This provides you with a very stronger negotiating power over other buyers when involved with multiple offers, received by the seller, at the same time. In today's market, you need as much help as you can get. 51% of the purchases in this area were cash offers last month!
As always, please feel free to call me, email me, or text me with any questions you may have: 941-504-1445, Sherry@SherryBitner.com