A. A pre-qualification will estimate how much money you are eligible to borrow before you apply for a mortgage. Be prepared to provide basic information such as income, debts and assets. A pre-qualification is not loan approval.
A. A pre-qualification is just this, it is a simple way of determining what you may or may not be qualified to borrow. A pre-approval is an approval that the bank will issue after a required amount of information is entered into the system and, providing the information entered is accurate and can be supplied at the lenders request, allows the loan to be closed.
A. A pre-qualification will estimate how much money you are eligible to borrow before you apply for a mortgage. Be prepared to provide basic information such as income, debts and assets. A pre-qualification is not loan approval.
A. A pre-qualification is just this, it is a simple way of determining what you may or may not be qualified to borrow. A pre-approval is an approval that the bank will issue after a required amount of information is entered into the system and, providing the information entered is accurate and can be supplied at the lenders request, allows the loan to be closed.
A. Many times when placing an offer on a piece of property, the realtor will as for either a pre-approval or a pre-qualification letter. In most cases it is a pre-approval letter. The realtor requests this so they can show the listing agent or home owner that you, the borrower, have met with a mortgage professional and that you are serious about moving forward. But remember that a pre-qualification letter and a pre-approval letter is not a guarantee that you will obtain financing. It is also important to remember that the interest rate you may have been quoted at the time of meeting with the mortgage professional may change when it comes time to lock in your loan.
A. Yes. A pre-qualification letter can be issued without having to show or share all of your documents or personal information. Though you may want to consider the mortgage professionals way of doing business if they are just willing to issue you a pre-qualification without actually documenting what it is that you are telling them. In order to truly understand how much you will be able to afford and get a better idea of how the lending process will work, it is advised that you ask your loan specialist what documentation they will require and when they are available to take the time to meet with you to thoroughly review the information.
A. A commitment letter is generally issued to the broker/banker based on the loan being approved. Just because you have received a commitment letter does not mean that the loan is guaranteed. It simply means that, based on the information either entered into the computer system or sent to the investor, the loan has been approved and they are committed to lend.
Many times when working with a realtor they will ask you if you have received a commitment letter. This is a word that is used improperly most of the time as you can typically only approve a commitment letter once you have submitted a complete loan application.
A. A commitment letter is a commitment to lend, while a pre-approval letter is a generic piece of paper that is written up usually to show to the realtor that you have been pre-approved and can afford the home. Unfortunately this is a system that is commonly abused and has also played a role in the current mortgage crisis. i.e. Bob wants to look at a home so he calls his friend Joe at the mortgage company. Joe says, "No problem, Bob, how much do you need it to say you are approved for?" Meanwhile, Joe never really sat down with Bob to discuss his situation or evaluate if Bob can truly afford the home. Hope that makes sense!!!
A. No, like any other type of loan process there is always the fine print. Most loan officers can manipulate the approval system to get you an approval or commitment letter. However, if at the end of the day the commitment letter asks for you, the borrower, to show something that you really can not provide then the bank reserves the right to decline the loan. We recommend strongly that you sit down with a professional loan coach and let them review all of your documents.