Get Mortgage Fit: Prequalification vs. Preapproval
Do you know the difference between a prequalification and a preapproval letter? Watch our video to learn more about each, and determine which is the best option for you. Not all mortgage lenders offer a preapproval letter, but at New American Funding we are happy to help! We want our clients to have the best home buying experience possible, so contact us today to get started and don't forget to visit our mortgage calculator.
In the home buying process, knowing what you can afford should be your first step. To start your first step, you would speak with a mortgage lender to help determine how much you can afford.
The lender would then provide you with a prequalification or preapproval letter. But there are major differences between the two types of letters.
What's the difference, and why is it important?
Let's take a look. So, most lenders provide you with a prequalification letter. this means a loan officer will ask you some basic information regarding your income and credit.
Based off the information you provide, and their best guess, the loan officer provides a prequalification letter.
However, since they're not an underwriter, there could be some honest mistakes. After you receive your letter, the next step is to look for your new home with your Real Estate Agent.
Now, you could be spending two weeks, two months, or even two years looking for your dream home based off a best guess prequalification letter.
Once your Real Estate Agent does find your home, it goes into escrow and the lender begins working on the necessary paperwork, including income documentation, assets, and verifying your credit.
Now, the underwriter finally receives your loan for review and the approval process could take possibly 10-20 days. During this time, they would see if there's any mistakes in the best guess prequalification letter. If there are mistakes, then you will be spending time working with the lender to fix your offer.
At New American Funding, our loan officers provide a preapproval letter. This means we go through the process of determining how much you can afford, and we also send the file to an underwriter to approve as well. So, before you even begin meeting with your Real Estate Agent to discuss neighborhoods,or driving around to look at houses, you will have a fully underwritten loan with all the approvals needed.
This way, when you're ready to purchase your home, it will be smooth sailing with our knowledgeable and highly trained loan officers guiding the way.
Our goal is to provide up front information so you know exactly what you can afford, and get into the home of your dreams as soon as possible.
What does a preapproval letter from New American Funding mean?
It's fully underwritten, so it isn't just a best guess. It's fully approved, so you know your loan will be a smooth process, and it's fully serviced in-house, so you are getting a faster service and turn-time to get you into your home. Because we want our clients to have the best home buying experience possible.