First Time Home Buyers: Pre-Qualify vs Pre-Approval

Today's market can be challenging for a home buyer. 

Being the first one to view the home and submit an offer may work in some instances, but not in every case.  Pre-qualify to pre-approved.  What is the difference?  

Pre-qualify - The lender has received a mortgage loan application from the borrower. A review of credit scores has been completed by the loan officer.

Verbally, the borrower has provided the lender with their assets, debts, income and cash available to close.  Sometimes in this fast paced market, the buyer is making every effort to submit an offer on a home and misses the most important step.

In order to move the buyer to the pre-approval stage, the lender should have a completed loan application, w-2s, tax returns, bank account statements and any other documentation for the underwriter to review for approval.  

Pre-approval - means the required documentation has been provided to the loan officer and the lender's underwriter. They have reviewed the documentation and gives the buyer a conditional pre-approval letter.  

This is still not an approval for a mortgage loan.  But, it helps the buyer with the offer submitted to the seller. Income, assets, debts have been verified. 

Conditional pre approval - The lender has received a copy of the purchase sales contract.

All of the necessary documentation including any repair amendments, survey, title commitment are received to ensure the lender requirements are satisfied.

The appraisal is ordered under this condition as well. Make sure to promptly submit any additional paperwork requested by the lender. This will assist with expediting the loan to clear to close. 

Clear to close - Lender conditions has been satisfied. 

Survey, title commitment, appraisal has been reviewed to ensure clear title and the home appraises for value. Homeowner's insurance has been submitted along with the real estate tax certificates. 

Closing/Funding - The mortgage loan documents are prepared. Buyer and seller sign the required closing documents. The lender/title company work together to get the loan funded.

Funding means that all lender conditions have been met, the buyer and seller have signed and authorization is provided to release the keys. 

After finding your dream home, don't let this happen to you: "Property is back on the market due to buyer financing." 

Be a strong buyer, get approved by a lender/underwriter.  

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