Mortgage Approval Or Prequalification When Buying A Home
The old saying that goes ” A person’s home is their castle” is just as true now as it was a long time ago. That is why even though buying a home is one of the largest investments that most people will make in their lifetimes, most Americans who rent their accommodations would still like to one day have a shot at owning a home of their own.
Unfortunately the housing and credit bubble that burst back in 2008 is still casting a long shadow over the housing market as a whole. The good news is that this trend is slowly starting to reverse itself, and specific regions of the country are actually beginning to emerge as real estate buyers markets, rather than the sellers markets that have held sway for so long.
Areas in Southern California such as Aliso Viejo and Mission Viejo are just such areas, and savvy prospective home buyers from all over the country are beginning to take notice. As competition for these more affordable homes begins to build, individuals who have solid information about the mortgage pre-qualification and pre-approval process will have a distinct advantage over those who do not.
This article will provide some fundamental information about this subject, and will answer some relevant questions along the way, such as; What is the mortgage pre-qualification or pre-approval process? And, are there ways to make being approved more likely in a buyers market? Let’s answer these questions.
WHAT DOES THE MORTGAGE PRE-QUALIFICATION AND PRE-APPROVAL PROCESS ENTAIL?
The first thing to understand is that there are some important differences between the two procedures. In most cases, prospective home buyers will get pre-qualified first. This process is fairly simple, and is usually the first step in the mortgage process.
In most cases, the person looking to get the loan will supply the lender or bank with some detailed information concerning their income, assets, and liabilities. This helps the lender to gain an overall idea of the individuals’ financial situation. It is important to note that this is a fairly superficial analysis, given that the lender only operates with information gained from the directly from the person, and not from credit reporting agencies.
Because of this, the amount of money that the prospective buyer is ‘pre-qualified’ for is really just a kind of a non-binding quote, rather than an actual commitment on the part of the lender.
The pre-approval process, on the other hand, is an in-depth and independent look by the lender at the borrowers entire financial history. Because of this, any loan amount that is pre-approved by the bank or lender will be put in writing as a conditional commitment. The advantage of this is that the buyer now knows that if they find a house in the loan range, they will actually be able to purchase it right away.
ARE THERE WAYS TO MAKE BEING APPROVED MORE LIKELY?
The best way for individuals to gain an advantage in a real estate buyers market is to make sure that they get BOTH pre-qualified and pre-approved. Once future buyers get the pre-approval letter from the lender, the people who are selling their homes will immediately know that the buyer is serious. This will give pre-approved buyers an edge over those who have only been pre-qualified.
So what is the takeaway from all of this? Prospective home buyers in Southern California should take the time to get pre-approved; it will save them time, money, and will give them an undeniable advantage.
