Pre-Approval & Pre-Qualification

April 26th, 2012 03:36

For many new homebuyers, the terms pre-qualification and pre-approval seem interchangeable. But they are not — and the distinction is an important one.

When you get pre-qualified, I perform a quick check to determine generally how large a home loan you can afford. Essentially, when a buyer is pre-qualified, the lender is saying it would most likely approve the buyer for “x” amount.

In order to get pre-qualified, you’ll need to provide me with some basic information on gross monthly income, other reliable reoccurring income, the balances and payments on current debts, and how much money has been saved for a down payment. Qualifying ratios are applied to those figures to determine what percentage of your gross monthly income can be used to pay for the home loan and attached expenses.

Pre-approval goes much deeper. In order to issue a pre-approval, I need to examine and verify your debt, income, savings, assets and credit report to ensure you can repay the loan amount. Where pre-qualification is a sort of educated guesstimate of the buyer’s purchasing power, pre-approval says the prospective lender would definitely be approved for the loan.

This is particularly useful when home shopping for multiple reasons. To begin with, pre-approval instantly lets you know what your actual budget is. When you begin home shopping, knowing what you can afford from the outset will help you and your real estate agent better focus your efforts to find the best home for your money. It sets the scope of your home-buying strategy.

Once you find a home within your budget that you like, being pre-approved provides you with an advantageous position over other buyers, because pre-approval assures the seller that you have access to the loan necessary to back your offer. I will provide you with a letter or certificate demonstrating that you are pre-approved for a certain amount of money, which you can provide as part of your offer.

Would you, a relative or a friend like to learn more, or get pre-qualified or pre-approved for a home loan at no cost? Please contact me and I will be happy to help you!


W.J. Bradley Mortgage Capital, LLC is a privately held independent mortgage lending firm, founded in 2003 and headquartered in Centennial, Colorado. We are a boutique lender, backed by private... Read More

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