What is a Mortgage Pre-approval?
October 7, 2014 | Posted by Blair Warner | No Comments
If you have even mentioned to a Realtor or mortgage professional that you are thinking of buying a home soon, you no doubt have heard the term “pre-approval”.
What is a mortgage pre-approval?
First, let’s clarify what a mortgage pre-approval is NOT. It is not the same as a pre-qualification. The pre-qualification process most often includes pulling your credit score and getting some information from you either verbally or from an application. No verification of any kind occurs. Mortgage pre-qualification happens when your lender approves you as the borrower for a certain amount to buy a house (how much house you can afford), and that you qualify on a least a preliminary basis. A pre-qualification is a minimal first step before most Realtors will begin showing you houses.
A mortgage pre-approval is more detailed. This process also includes pulling your credit score, but includes verifying income with paystubs or a W2 tax form, collecting bank statements, etc. and can sometimes even be submitted to underwriting. Mortgage pre-approval positions a buyer to better negotiate a purchase because the seller knows your offer is backed by a lender. Mortgage approval comes after pre-approval.
What do you do if you don’t qualify for a mortgage pre-approval?
If there are credit or debt road blocks to obtaining a pre-approval, or a pre-qualification, for that mater, now would be the time to start taking steps to improve your credit, and if necessary, contact a certified credit consultant. Don’t let it discourage you. You are on the road to home ownership and WILL eventually start looking for your dream home; you just need to get your ducks in a row, first.
For more details on mortgage pre-approval and why home buyers should get pre-approved for a mortgage go here –> (courtesy of Amerifirst Home Mortgage)
Posted by Blair Warner – Credit Consultant and Chief Editor of UpgradeMyCredit.com
