NOLA WESTBANK HOMES

NOLA WESTBANK HOMES
New Orleans Westbank Real Estate

Monday, February 27, 2012

Mortgage Loan Prequalification or Preapproval ?


We have a guess post blog this week by Andrew Hill @ NewHome Source  written about Prequalifing for your mortgage loan.  I want to point out that terminology differentiates in different parts of the country.  So to eliminate confusion, I just want to point out that there is a difference between prequalification and a preapproval.  A prequalification is not always a preapproval, because a preapproval only occurs after your mortgage company receives and verified your documents that back up the information you provided to them about your income, assets, liabilities and job experience.  When you punch in answers to a set of questions online and are given a mortgage prequalification, this is not going to hold a lot of weight when it comes time to put in an offer to buy a home.  Please be sure you are working with a qualified Realtor who has a valid Preapproval Letter waiting for you!

Prequalification: What is it & Why does it Matter?

By Andrew Hill @ www.newhomesource.com

So you’ve decided you’re ready to buy a home. Congratulations! Whether you’re a first time buyer or an expert in real estate, the first thing you’ll want to do it get prequalified for a home loan. You probably have heard this term before, but what exactly does it mean to ‘prequalify’? In short, pre-qualification is an assurance by the lender, which determines the highest loan amount that you qualify for.

Why should you prequalify? For starters, it saves you time and money. Buyers who are pre-qualified are able to consult better realtors and thus receive better service. Pre-qualified buyers are also given preference in multiple-offer situations and can negotiate for a better price than those who haven’t been prequalified.

Given these benefits, you may be asking yourself, “How can I get prequalified?”
In order to do prequalify, you’ll need:
1.      Credit reports
2.      Online mortgage/finance services
3.      A lender
The process essentially consists of you and a lender (or a mortgage broker) looking over your credit history and your debt to income ratio, for which you’ll need to provide your gross monthly income and total monthly payments. Depending on your unique situation, the lender you’re working with may ask for other documentation and information regarding your finances.

In order for you and the lender to look over your financial background and current situation, you’ll need to give your lender authorization to pull your credit report. After your information has been evaluated, the lender will construct a letter of prequalification for you, which states that they have reviewed your credit and financial information.
With this little letter in hand, you’ll be that much closer to finding the home of your dreams.

Tips:

-To find a good lender, ask for a referral from a trusted relative, friend, or co-worker.
-Prequalification is usually a free service. If the lender tried to charge you, find a different lender. 
-You don’t have to do business with the lender that prequalifies you. Shop around, compare rates, and choose the lender who has the best offer.


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