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Category: Finance, Mortgages.

You will hear mortgage people throwing around words like Pre- Qualified, Pre- Approved& Approved.

Which do you need to purchase a home? What do these mean? This article will rapidly sort this out for you. This would include looking at your credit and your debt to income ratio( much do you owe including the payment for your new mortgage vs. how much you earn) . Pre- Qualified: For this only basic information would be gathered from you to qualify you for your new home loan. You would also be asked if you are working and for how long.

Pre- Approved: A Universal Loan Application{ 1003} is taken. This is a very fast and very easy process. Some forms may need to be signed. This would be up to the discretion of your mortgage broker. Income documentation may be gathered at this time, but is not necessary for a pre- approval. After this, your loan would submitted to" Automated Underwriting" .

This would generate a" Pre- Approval. " This does not mean that the loan will be approved with 100% certainty. This is a computer program that compares all aspects of the loan to specific standards. However, there is a high probability that the loan would go through to final approval and close. In most cases an approval would be obtained fairly easily after you have found a property and contracted. Depending upon the results some more information may need to be gathered or your loan may need to be repackaged and processed a different way. During this phase the loan is submitted with a" to be determined" address. Normally after the pre- approval is gotten and while you are looking for a home all the documentation would be gathered and disclosures would be signed by you.

When you contract on a home an actual address would be entered. This would save time when you actually do find a home. The underwriter may inform me that additional conditions need to be met. Approved: After the loan is pre- approved, you have found a property and all needed documentation is gathered, it is sent to the underwriter. These are commonly referred to as" Conditions to for Docs" . After these conditions are met, your loan is approved. This simply means these items are needed before the lender will draw your closing documents.

This is confirmed to you immediately and a" Clear to Close" order is given. The Pre- Approval is what you need to start shopping for a home. As you can see above a Pre- Qualification will just give you an idea if you can even obtain a mortgage. You would be issued a" Pre- Approval Letter" that you would present when you sign the contract. It is important to understand this and other aspects of the home buying process so you can get the most out of your efforts. Finally, after you are approved, you would close on your new home.

Always make sure you are prepared and do your home work. Licensed Mortgage Broker. Miles Loss. Home