 Prudential Lifestyles Real Estate, Brokerage |
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 Should You Be Pre-Qualified or Pre-Approved? That depends on whom you ask. It seems that definitions can vary from lender to lender and individual to individual. While most discussion, written and verbal, compares pre-qualification to pre-approval, lenders actually offer three levels of services to qualify a borrower for a mortgage-pre-qualification, pre-approval and final commitment ("Pre-Qualified or Pre-Approved: What's the Difference?" posted June 12, 2000, at the Cincinnati Board of REALTORS®, cbor.org) Pre-Qualification Usually, in just a 15-minute phone call, a lender can pre-qualify you for a mortgage. Because the lender's underwriters do not validate credit history or employment information for pre-qualification, this preliminary review results in a non-binding opinion regarding how much of a mortgage a borrower can afford. By seeking pre-qualification, you'll come away with an estimated monthly payment and a price range to shop based on the loan size. This information, however, is intended to be a guide as you begin the home buying process. It does not guarantee that you'll be approved for a mortgage. Pre-Approval The closest thing to a guaranteed loan comes with pre-approval. After completing a formal application and providing all the necessary documentation related to employment and financial disposition, the file, along with a full credit report, will be thoroughly evaluated and verified by the lender's underwriters. If everything meets to their satisfaction, you will be cleared for a loan of a determined amount. This in no way means you have a firm commitment though. The loan is subject to a fully executed sales contract and an acceptable appraisal. But being pre-approved can give you a sizeable advantage. Many lenders present borrowers with a letter, which may give you more leverage with a seller. Firm Commitment The lender can issue a firm commitment once the seller accepts your offer, the home has received a satisfactory appraisal, and your credit has been rechecked. If all checks out, you've got a mortgage! To help eliminate unwanted surprises, keep these tips in mind:
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© 1998-2010, Prudential Financial, Inc. and its subsidiaries. Prudential Real Estate brokerage services are offered through the network of independently owned and operated franchisees of Prudential Real Estate and Relocation Services, Inc., a Prudential Financial company. PRUDENTIAL, PRUDENTIAL FINANCIAL, and the Rock Logo are service marks of The Prudential Insurance Company of America. Prudential Financial is a service mark of The Prudential Insurance Company of America and its Affiliates. The Prudential Insurance Company of America and Prudential Real Estate and Relocation Services, Inc. are companies of Prudential Financial, Inc. Prudential Financial, Inc. of the United States is not affiliated with Prudential plc. which is headquartered in the United Kingdom. |
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