Determining how much you can afford to purchase before we actually start the process if locating your home, allows us to narrow the search. This allows us to focus on the right list and select areas that may afford you stronger buying power on a larger home.
We always want you to get pre-qualified, and where possible get pre-approved. This allows a faster and easier negotiation once we begin to write a contract. It can mean the difference of success or failure.
Because you go through the steps necessary to get pre-qualified, you will have an added benefit of understanding the costs associated in purchasing your home. Not all costs are directly related to your mortgage. However, these costs will still affect your on hand cash reserves and or how much will ultimately be applied toward the mortgage.
What is the difference between pre-qualified and pre-approval?
The real difference is in how much under-writing and documentation that is provided. The level of commitment from the lender and the level of commitment or under writing from the lender are critical and are based upon the documentation and credit history.
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Pre-qualified - you work with a mortgage specialist and fill out simple forms, provide documentation on how much you earn, how much you owe on a monthly basis and also how much you can put down. All information is handled strictly confidential. The result is an estimate as to the highest price that you can afford and the term and condition. Further, more complete documentation or a more in-depth research may indicate that you qualify for a bit higher loan amount.
Pre-approval – is similar to pre-qualifying, but much more in-depth- you fill out complete documentation 100%. Complete research is done so that all issues are resolved prior to approval and your home loan becoming underwritten. Your lender handles all documentation and all information is strictly confidential. The result is as good as cash and provides the highest level of negotiation leverage besides actual cash.
However, in both cases the final loan is dependant upon things staying stable through out the process up to and including the day of closing, so major purchases should be avoided and large cash transfers out of your bank accounts or other major asset changes will directly effect your final closing approval.