Are you pre-qualified or pre-approved for a home loan?
Most people don’t know the difference between a Pre-qualification and a Pre-Approval. As a top Plano, McKinney, and Frisco Texas mortgage lender, we feel you should know the difference. It could mean the difference between winning that competitive bid or being beat out by a buyer that was wise enough to complete the most important step – full Pre-Approval. The Plano, McKinney, and Frisco Texas the housing market is very competitive with very few available homes. In fact, almost every market is competitive at the moment.

How to get a mortgage Preapproval

Before you begin to shop for a new Plano, McKinney, and Frisco Texas home, you should set up a time to meet with me so we can figure out how much you can afford. This will put you in a better position as a buyer. That’s when it is important to understand the distinction between being pre-qualified for a home loan and pre-approved for a home loan. The difference between the two terms will be crucial when you decide to make an offer on a house.

In the state of Texas, the word Pre-Approval actually means that the lender has issued a loan commitment. Just to be perfectly clear, for the purpose of the is article, we are actually referring to a conditional pre-qualification when we talk about being pre-approved which means that the all of the required income and asset documentation has been collected and reviewed by the loan officer. Issuing a loan commitment means that an underwriter has reviewed all the documentation and “commits” to doing the loan subject to acceptable appraisal, title, and survey.

To get pre-qualified for a Plano, McKinney, and Frisco Texas home loan, we will verbally collect various pieces of information from you including your employment, assets and financial status. We will look at your credit profile and assess goals for a down payment that you wish to make and get an idea of different loan programs that would work for you. We will issue you a pre-qualification letter indicating the amount you are pre-qualified to borrow based upon unverified information.

To get pre-approved, you will complete a mortgage application and voluntarily provide us with various documents including your employment history, pay stubs for the last 30 days, 2 years of W-2 and tax returns, bank statements and retirement accounts and other documentation that might be required such as divorce decrees, bankruptcy discharges and real estate holding information. We will review your mortgage options and insure that the documentation provided will suffice for the program selected. Once the documentation provided is reviewed your we will issue a “pre-approval” (conditional prequalification letter) letter indicating the amount we are willing to lend to you for your home.

It is important to understand that a pre-qualification letter is just an estimate of what you are eligible to borrow, not a commitment to lend. The real estate market is currently so active that great homes sell quickly. Many sellers will not even entertain your offer without a full approval that included verbiage indicating that your documentation has been reviewed.

Getting pre-approved for a home loan gives you competitive advantage when the time comes to bid on a home because you have been approved for a home loan for a specified amount. My team goes one step farther then most of our competitors. I will call the listing agent of the house that you wish to purchase and verify for them that you are completely ready to go and can close quickly on the home. Because of our reputation of exceptional service and closing on time, you have a better chance of getting your offer accepted.

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. You are not bound to this offer and it does not mean you must purchase any particular home.

The Richard Woodward Team does offer a free pre-approval with complete verification of your documentation. This gives you peace of mind knowing that you will have no surprises at the end of your purchase transaction. I will provide you with a step by step process chart and keep you informed at every step with our “In Process” status updates.

To get your piece of mind, complete an online application now or call us at (214) 945-1066