Pre-Qualification is how much money a bank will lend you based on your income, assets, and debts. Pre-Qualification is typically done over the phone with a lending specialist. This is the first step to get started in the buying process. The lending specialist will do a minimal credit review over the phone which means discussing your credit background. When you begin the Pre-Approval process the lending specialist will actually check your credit but during Pre- Qualification they will simply gather basic information regarding your financial and credit situation.
Pre-Approval is a more formal process and includes completing a loan application on-line and providing documentation regarding income and assets. During the Pre-Approval process the lending specialist will ask for authorization to check credit in order to analyze debt ratios. Pre- Approval is typically done when you start looking for houses with a real estate agent or prior to writing an offer.
There are three factors that affect how much you can afford when you decide you would like to buy a home.
Most lenders will have you go online to apply for pre-approval. You will be asked to provide documents that help determine how much you are qualified to borrow. The lending specialist will typically ask you to upload the documents through a secured link. Download our loan application checklist here.
Important rules to follow to ensure a smooth loan process.