Once you’ve made the decision to buy a home, you’ll typically speak with a Real Estate Agent or Loan Officer. Unless you’re paying cash, it’s a good idea to speak with your Sidwell Loan Officer before seeking the services of a Realtor. That way you’ll have some idea as to where you stand financially. Regardless of whom you call first, Realtor or Loan Officer, seasoned professionals will ask if you’ve been Pre-Qualified or Pre-Approved by a lender.
Even if you start your search online, you’ll repeatedly see pop-ups that say “”Get Pre-Qualified” or “Get Pre-Approved.” They both relate to your ability to qualify for a mortgage loan. Since this may be your first experience in the real estate and mortgage arena, let’s explore these terms and their importance.
We should note that the term Pre-Qualification is misleading because it does not qualify one to purchase a home, but establishes eligibility. Pre-Qualification is the process of reviewing your income and debts to determine the amount you have available each month to service a mortgage debt — after you’ve paid your existing obligations.
Pre-Qualification is NOT a loan approval. It simply determines the maximum purchase price of the home you’re eligible to buy.
Tomorrow we’ll take a look at what it means to be Pre-Approved.