Fast-Track Your Way to Homeownership with a Pre-Approval Letter
- 2 min
What you'll learn.
- What is pre-qualification?
- What is a pre-approval?
- What you’ll need for a pre-approval
Don’t get caught up on these two p words during the loan journey: pre-approval and pre-qualify! We’re going to explain everything you need to know so that you’re prepared for homeownership!
First things first, pre-qualification is a quick estimate of how much you might be able borrow from a lender based on an evaluation of your income, debts and financial history. Pre-approval has more weight, requires documentation, and you’ll receive a pre-approval letter which might even set you apart from the buying competition. (And let’s be real, in this market that could be a 👏Game. 👏 Changer.)
What is pre-qualification?
Pre-qualification is a simple evaluation of your information: your name, phone number, income, assets, and debts. There are some other questions a lender might ask, like:
Where are you working?
How long have your worked there?
Do you have any money saved?
What do you plan to do with the property? (Live in it, rent it, renovate it, or sell it)
Is anyone helping you with the down payment?
A pre-qualification is not a guarantee of a loan, but it does help you and your loan officer identify what your next steps are.
While pre-qualification is a great opportunity to discuss the different loan products available to you, that way, you gain a better understanding of your options and shortens the loan process.
However, a pre-qualification is not a guarantee that you’ll be approved for the exact amount. That’s why pre-approvals carry so much more weight in a real estate offer. Pre-approvals are EXACTLY how much of a loan you are pre-approved for, so there is a lower risk of surprises or crushed home dreams down the road.
What is a pre-approval?
A mortgage pre-approval carries more weight and goes a step further than pre-qualifying. Your lender will take more of a deep dive into your financial health, your income and assets, employment and debts. Essentially, your loan is going through upfront underwriting and puts you on the fast-track to homebuying. (Link to upfront underwriting blog.)
What you need for a pre-approval
Here’s where you need to provide:
Employment verification (W-2's or 1099s)
Retirement and Brokerage account statements
Current real estate debt or rental statements
Monthly debt payments (student loans, auto loans, credit card bills, utility bills, etc.)
Court orders (divorce, child support, alimony, etc.)
Down payment amount
Our team looks at your entire financial make-up to get a complete picture of your buying power. Once you’ve given us everything we need, we will give you a pre-approval letter that shows you how much you can afford based on your current financial health. This is invaluable to agents you meet along the way on your house hunt!
If you’re serious about purchasing a home, and you’re ready to take the next step in the process before falling in love with your dream home, then getting pre-approved is the natural next step! Let’s get you on your way to finding the home of your dreams!
A pre-approval is not a guarantee of a final loan approval. Any material change to credit worthiness, employment status, or financial position may impact final loan approval. All loans subject to satisfactory appraisal, clear property title, and final credit approval.