Pre-approval or Prequalification

With your home needs defined, it is to your advantage to also define what your budget can afford. There can be nothing more disappointing than finding just the right home and then discover you cannot afford it. Prequalification/pre-approval allows you to move swiftly when you find the right home, it shows the seller you are a serious prospect and can actually afford to buy the property. There are two processes that could be followed: pre-approval or prequalification for a loan. If needed, your agent can provide a list of mortgage lenders for you to choose from.

Prequalification – (the simplest process) a mortgage company will require basic information about your finances, such as, how much you earn, your debt load, etc. With this general information they can provide a rough estimate of how much of a loan you could qualify for. Prequalification letters can be required with an offer to purchase on some properties.

Pre-approval - (a more in depth process) Specific financial and other relevant information will be needed, such as if you are a first time home buyer. The lender will perform an extensive check of your finances, including your credit rating, debt load, how much money you will have for a down payment, etc. The final figure will be a very reliable estimate of what you can afford.

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