Real Estate in Beaver County
Melissa Hill
724-367-7092724-367-7092

Pre-Approved VS. Pre-Qualified What’s the difference? When should I get it done?

Pre-Approved

Major changes are coming to the Real Estate world this summer. Most of these changes have been made to protect the consumer but could have an impact on the length of time a transaction will take. I have been getting educated on all of these changes for past few months and it made me realize that the average person may not know the difference between getting Pre-Qualified for a loan and getting Pre- Approved for a loan. Many buyers and their agents have mistakenly taken a prequalification as the buyer being approved for a loan and that can cause a lot of frustration for everyone so it is important to understand the difference.

Pre-Qualification- Prequalification is a lender’s estimate of how much you could be eligible to borrow based on information YOU supply. Prequalification does not mean you will get the loan. They do not pull credit or collect the necessary documents to determine your buying power. Your Realtor can actually help you through a prequalification or you can do it yourself.

Pre-Approval- With the new rules that are coming out a buyer must request for a pre-approval and voluntarily provide the lender the necessary documents needed in order to obtain an approval. The lender is no longer permitted to ask for the documents up front. The lender will do a complete analysis based on credit scores, debt to income ratios, past employment history, etc.  They will determine the different loan types that you qualify for and often provide you specific figures so that you can determine the best loan program for you.

Most lenders will not charge you anything up front to get a loan approval/pre-approval and if they do it is usually only the credit report fee that they will collect. If you are thinking about purchasing a home contacting a reputable loan officer is the FIRST thing you should do and here are some main reasons why:

1). In the current market a lot of sellers are requesting that only pre-approved buyers tour their homes. It takes a lot of work to keep your house looking like it belongs on HGTV and when you are getting several showings in any given week you don’t want to be wasting time preparing the home for someone who can’t get a loan.

2.) A lot of homes are selling in the first few days that they are on the market so you want to be ready. If you find a house on a Saturday afternoon you may need to wait until Monday to start the loan approval process and Saturday night an already approved buyer may make an offer before you even have a shot at it.

3.) Not all homes qualify for all types of financing. You don’t want to waste your time looking at a home that won’t meet the type of financing you qualify for.

4.) There are many factors that can effect what your monthly payment will be. Taxes, additional insurance (flood insurance for example), interest rates. You don’t want to go into this blind without knowing what you can afford. You may have a idea of what you want to spend monthly but a home that is $100,000 that requires flood insurance and has high taxes can very easily have the same monthly payment as a house that is $175,000 with low taxes and no additional insurance requirements.

The whole process can be frustrating and confusing and with the industry constantly changing you need professionals who have the knowledge and expertise to guide you through the process smoothly. Choose a local agent and local banker who will communicate and look out for YOUR best interests. There are a lot of lending institutions out there so find a Realtor you trust to help guide you. If they have been in the business a while chances are they have worked with the loan officer or knows someone who has. I could write another full page on choosing the right lender…stay tuned next time to find out the differences between a mortgage banker and a mortgage broker.

 

Melissa Hill

Northwood Realty Services

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5Celia warner

Because Melissa was so personable at our first phone contact and at our first meeting showed that she had the most internet connections as well as offering the highest sale price, I was happy to enlist her as my realtor. As the process unfolded and... (more)

5jacobwoods4

I would strongly recommend Melissa as a great choice for your real estate agent! She was very attentive, answered all of our questions very promptly, and helped us sell our house in two days!

5dpb1770

Melissa Hill is an outstanding Real Estate Agent. She helped me sell my home for top dollar and buy a new one at the best price possible. Melissa was professional and ethical during the entire process and was always on time with a positive sense of urgency. ... (more)

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