My OperaHome Loan - What Do You Need to Know
Monday, March 19, 2012 12:11:59 PM
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While shopping for a home loan, brokers and lenders are able to offer to pre-qualify or pre-approve you for a mortgage. Home loan pre-qualification and pre-approval are wide and varied and distinct processes, so it is important for you to learn the difference.
Pre-Qualified
A loan officer or loan processor doing work for a mortgage lender and broker can typically pre-qualify you for a mortgage within an hour. Getting pre-qualified for a mortgage is a good first step that will allow you to know if you should go up to the pre-approval process. To get pre-qualified you will need to complete a mortgage application and the broker or loan company to pull your consumer credit. They will review the mortgage application plus your credit and let your know if you are pre-qualified.
Pre-Approved
Only a mortgage underwriter can pre-approve you for a mortgage, loan officers and processors are unable to. Typically mortgage brokers shouldn't have underwriters on staff, so they really typically can not pre-approve your property loan. A valid pre-approval is the best tool you can have when buying a new home. The key is so that it is valid. A valid pre-approval has been underwritten by an authorized underwriter (an underwriter is a final person that says your loan is approved). If an underwriter pre-approves your home loan application upfront, all you have to do is find the home you would like, have it appraised, and then you should be able to close in just a few days. Some mortgage brokers together with lenders will issue pre-approvals which happen to have not been reviewed by an authorized underwriter, be sure to ask.
To get pre-approved to get a home loan you will need to provide the underwriter with all your income and asset paperwork (W2's, Bank Arguments, etc). The underwriter will review your credit ratings, mortgage application, documentation, and approve you for a set loan amount and property or home value. Once you have been pre-approved for a mortgage you are ready to start shopping. The process typically takes 2 or 3 days.
Knowing exactly what type of home loan you can obtain will allow you to shop and negotiate confidently. For example, you could inform a seller that you're pre-approved for the mortgage and you are prepared to close next week. In the event the seller needs to close quickly, it will not matter when there is another buyer that cannot close for weeks and months. Plus, sellers do not love to take their properties off of the market for long periods of time. The ability to close quickly is one way to get a great bargain.
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