Prequalification vs. Preapproval
The difference between a prequalification letter and preapproval letter matters a lot. Learn the difference between a preapproval and prequalification letter, and why a preapproval letter might be the best option for you. Not all mortgage lenders offer a preapproval letter though; if this is something you are looking for, make sure you are working with a company that provides this. Call New American Funding today to see what your preapproval is.
Pre-qualification vs. Pre-approval Video transcript
We try to stay healthy and fit in our everyday lives, so why wouldn't your mortgage fitness be important to you as well? Learn more about mortgage terms, loan programs, and steps during the loan process for purchasing or refinancing your home. Let's get mortgage fit!
Alright. Hello, I'm Kevin Ramirez director of training here at New American Funding. In the home buying process, knowing what you can afford should be your first step. To find out, speak with a mortgage lender and they will determine how much you can afford. This process is called pre-qualification or pre-approval, and there are major differences between the two types of letters each one generates. What's the difference and why is it important? Let's take a look.
Most lenders provide a pre-qualification 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 pre-qualification letter.
Since they are 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. However, you are now spending time, two weeks, two months, or possibly even two years looking for your dream home based off a best guess pre-qualification 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 credit. The underwriter now finally receives your loan for review and approval, possibly 10-20 days into this process and at this time they would see if there were any mistakes in the best guess pre-qualification letter. If there are mistakes, then you will spend time working with a lender to fix your offer.
Here at New American Funding we offer another option. A pre-approval letter. This means we go through the process of determining how much you can afford, and we also send your file to an underwriter to approval as well. So, before you begin meeting with your real estate agent to discuss best neighborhoods, or driving around to find that dream house, you will have a fully underwritten loan will all the approvals needed.
When you are 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 your dream home as quickly as possible.
What does a preapproval letter from New American Funding mean? Well it means that its fully underwritten so this isn’t just a best guess, its fully approved so you know your loan will be a smooth process, and it is fully serviced which means there’s faster service and turn times to get you into your new home because we want our clients to have the best homebuying experience possible.Thanks for watching this episode of Get Mortgage Fit and keep watching our series to improve your mortgage health.