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Are you Pre-Qualified or Approved for a loan?

Before you begin to shop for a new home, you should set up a time to meet with me so we can discuss the mortgage approval process and figure out how much you can afford.  This puts you in a better position as a buyer.  That's when it is important to understand the distinction between being pre-qualified for a loan and approved for a loan.  The difference between the two terms will be crucial when you decide to make an offer on a new home in Virginia, Maryland or Florida.

In either case, we will review and discuss your present situation and the goals you want to accomplish.  It is important to for us to understand your dreams and aspirations as well as your sensitivity to risk.  We will explore your timing regarding a transaction and prepare for any roadblocks.

To get pre-qualified for a loan, I will collect information about your debt, income, and assets.  We'll look at your credit profile and assess goals for a down payment and get an idea of different loan programs that will work for you.  I will issue you a pre-qualification letter indicating the amount you are pre-qualified to borrow.

Sellers will want you to have a loan commitment!

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.  Getting Approved for a loan gives you the 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 and provide me with various information verifying your employment, assets and financial status such as pay-stubs, W-2 forms, bank records and credit card statements.  We'll review your mortgage options, talk about mortgage rates and submit your application to the lender that best meets your needs.  Once the application process is complete you will get a guaranteed loan approval and receive a loan commitment letter indicating the amount your lender is willing to lend you for your home.

An Approval letter is binding on the lender yet always conditional;  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.  But rest assured, we work with you to avoid these situations.