You’re ready to buy your home, and you’re hearing words like pre-approval and pre-qualification; What’s the big difference between pre-approved and being pre-qualified? The difference could mean your offer is accepted instead of rejected.
Pre-qualification is the first step in the mortgage process. You and your lender will discuss your financial situation (assets, debts and income). From this conversation, you’ll have an idea of what you can afford. At this stage, a credit report may not be pulled, and income is not typically verified. Because of this, your pre-qualification estimate may be inaccurate.
Note: Simply because you pre-qualify for an amount does not mean that it’s the best solution for you.
Since the pre-qualification can be inaccurate, our team works with you through the pre-approval process. During this process, you and your loan officer will review your credit report, discuss your monthly budget, and determine the best combination of loan type, purchase price, and down payment to fit your needs. It’s at this point that you will complete a mortgage application so that you and your loan officer can accurately determine your eligibility.
Note: As part of our pre-approval process our team works with you to determine your comfortable monthly payment.
Your loan officer will ask that you provide the following documents with your mortgage application:
- 2 Most Recent Pay Stubs – to verify current employment and provide information on how you are paid (i.e. fulltime, part time, salary, hourly, overtime, bonus)
- Last 2 years of Federal Tax Returns – to verify the additional income streams, self-employment, other write-offs that affect the income calculation
- Last 2 years of W2s – to verify current/past employment
- 2 Most Recent Asset Statements – to verify funds for down payment, closing costs, and reserves
Are you ready to be pre-approved? Gather your documents and download our app today for a seamless pre-approval process! https://app.directmortgageloans.com/j3ius
The Power of the Pre-Approval
You have your pre-approval. Now what? How does this benefit you?
Your pre-approval letter is powerful in the home buying market. It communicates that you’re a serious buyer to your real estate agent and home sellers. With your pre-approval letter, you’ll be able to:
- Know exactly how much you can borrow
With your updated documents, you can rest assured that the amount you’re approved for on your pre-approval letter is the amount you’re eligible for based on your debt-to-income ratio, down payment, and credit score.
- Have a higher offer acceptance rate
When you decide to place an offer on a house, both you and the seller will be confident that the funds will be available if accepted.
- Accelerate Your Loan Process
Working with our team will ensure that your pre-approval letter is accurate to your needs and eligibility. The extra effort prior to your home search will minimize changes and issues from the time you enter into a contract until settlement.