The Truth About Pre-Qualification
The Real Truth of Pre-Qualification it allows you to understand what you can afford. A great quote one of my favorites throughout my life has always been “The future belongs to those who prepare for it”, an American essayist Ralph Waldo Emerson is credited with having said it. Truly sage advice for homebuyers in such a competitive market as is DFW today. Unfortunately, without proper preparation, many buyers get lulled into the mistaken notion that if a lender pre-qualifies them for a mortgage, it means that they have been pre-approved for the home loan needed to finalize a purchase. The terms need a little explaining and truthfully there is a world of difference between these two terms. If you've ever been confused by the two, we'll bring you up to speed on how they differ – and why a misunderstanding can mean disaster for borrowers. Here is the Skinny on Pre-Qualified Getting pre-qualified is the first and important initial step in the home buying and mortgage process, and it's generally fairly simple. You supply a bank or lender of your choosing with a brief and minimal statement of your overall financial picture, including your debt, income and assets. After evaluating this information, a lender can give you an idea of the size of and value of and buying power of the mortgage for which you qualify. Pre-qualification can be done over the phone or on the Internet, and there is usually no cost involved. Loan pre-qualification does not include an analysis of your credit report or an in-depth look at your ability to purchase a home. The initial pre-qualification step allows you to discuss any goals or needs you may have regarding your mortgage with your lender. At this point, a lender can explain your various mortgage options and recommend the type that might be best suited to your situation. A great way to think about the pre-qualification process and mortgages is to think of as a way to understand and decide how much you can afford to buy and how much you can afford to borrow and what it will all cost. Because it's a quick procedure – and based only on the information you provide to the lender your pre-qualified sum is not a sure thing; it's just the amount for which you might expect to be approved. For this reason, being a pre-qualified buyer doesn't carry the same weight as being a pre-approved buyer who has been more thoroughly investigated.