Friday, April 18, 2008

Are you Pre-Qualified or Pre-Approved?

Before you begin to shop for Saline real estate, it is best that you set up a time to meet with a mortgage lender, so you can figure out how much you can afford. This will put you in a better position as a buyer.

It is important to understand the distinction between being pre-qualified for a loan and pre-approved for a loan. The difference between the two terms will be crucial when you decide to make an offer on a house.

To get pre-qualified for a loan, a lender will collect information about your debt, income, and assets. The lender will also look at your credit profile and your assets for a down payment, so that you can get an idea of all the different loan programs that would work for you. The lender will then issue to you a pre-qualification letter indicating the amount you are pre-qualified to borrow.

It is important to understand that a pre-qualification letter is just an estimate of what you are eligible to borrow. It is not a commitment to lend.

Getting pre-approved for a loan gives you competitive advantage when the time comes to bid on a home, because you have been approved for a loan for a specified amount.
To get pre-approved, you will complete a mortgage application. With the application, you will provide the lender with various information - your employment, assets and financial status. The lender will also review your mortgage options and submit your application to the investor that best meets your needs. Once the application process is complete, you will receive a pre-approval letter indicating the amount your lender is willing to lend you for your home.

A pre-approval letter is not binding on the lender; it is subject to an appraisal of the home you wish to purchase and certain other conditions. If your financial situation changes (e.g. you lose your job), interest rates rise or a specified expiration date passes, your lender must review your situation and recalculate your mortgage amount accordingly.

So, when it’s time for you to shop for Real Estate in Saline, ask me for the names of some outstanding mortgage lenders.

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