Why should we get pre-qualified and what is the difference between pre-approved and pre-qualified?
That is a great question and I am so glad you asked!
Getting pre-qualified is the most important step in buying a new home. How else can we know for sure that we can actually buy? I cannot tell you how many people in the past 15 years have come to me and are already under contract and cannot qualify. What is even scarier is I have met with too many families to mention that have their current homes sold or under contract to sale, and cannot qualify. That is a horrible position to be in and the ripple effect is even scarier.
How do we correct this? Again, I am glad you asked!
It is so very important to meet with a quality lender. One who will take the time to delve into your overall financial position and give you 100% honest and correct advice. It should be the very first thing you do when you are considering buying a new home. With ever changing guidelines and requirements, it is of the utmost importance to get your financing in place first. I have talked with literally thousands of people over the years, and I am told daily….”I have great credit, I have great income, and I have little or no debt.”
I will always reply with…I understand. However, without both of us digging in and getting all the facts, how can we give an approval to go shopping for a new home? It is like going to the doctor and telling him your symptoms and telling him what meds you use. How irresponsible would that be for him or her to say…I agree, here is your prescription. We would never accept that and you should never accept that from a lender. It is absolutely imperative that your lender review your credit report, review all of your income documents, and review all of your assets. Without this, how could we say yes to the biggest purchase you will make in your lifetime?
My team and I pride ourselves in not only knowing and keeping up with all of the guidelines and all of the programs available, but we also go the extra mile in making sure you can buy! When we say yes, we want you and your realtor to know it is a YES. There have been too many horror stories about people going under contract only to find out they cannot buy. That is ridiculous to say the least!
The difference between a pre-approval and a pre-qualified loan approval: how much factual data is provided and then verified.
I have seen lenders take what a prospective buyer claims their income and debts to be, then ask about credit, and then offer a pre-approval letter without verifying anything at all. This practice is common in the industry and to me that is crazy. You may have excellent credit, you may not have many debts, but until a professional lender verifies all of your information and structures a complete loan qualification for you, then you are NOT approved.
What you need is a true pre-qualification. Let a lender examine all the details, pulling credit, gathering pay stubs, and obtaining tax and asset documents. Have them do a complete workup of your financial picture and then you will KNOW exactly what you qualify for and then you can start the fun part of this process, which is looking for your perfect new home!
I have an old mentor who used to say, and I am sure he still says….”Hope is not a strategy!”
If you hope to make a purchase, true pre-qualification is the only strategy that will assuredly set your feet on a path to achieve that goal. May this post be helpful to you, and if you know of anyone or if you are in the market yourself to buy a new home, please call me for a free consultation: 423-842-6004.
You can also apply using this secured online application page.
***Brand Mortgage is a full-service, equal opportunity, fair housing lender serving 10 states: Alabama, Florida, Georgia, Kentucky, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, and Virginia.