Are you pre-qualified or pre-approved for a loan? Before you begin to shop for a new home, you should set up a time to meet with me so that we can determine how much you can afford. This will put you in a stronger position as a buyer. It is important to understand the distinction between being simply pre-qualified for a loan or pre-approved. This difference will prove critical when you decide to make an offer on a house.

To get pre-qualified for a loan, I will collect information about your debt, income, and assets. We’ll look at your credit profile and assess goals for a down payment and get an idea of different loan programs that would work for you. I will issue you a pre-qualification letter indicating the amount you are pre-qualified to borrow.

It is important to understand that a pre-qualification letter is just an estimate of what you are eligible to borrow, not a commitment to lend. Getting pre-approved for a loan gives you a competitive advantage when the time comes to bid on a home because you have been pre-approved by a lender for a specified amount. To get pre-approved, you will complete and sign a loan application and provide me with a variety of information. I will verify your income through either pay stubs or tax returns; assets by reviewing bank statements; and income history through W2s, tax returns or both. We'll review several different loan scenarios and you'll decide which best meets your needs. Then, we will submit all this information to the lender for approval. Once approval has been issued by the lender, I will provide you or your real estate agent with a a pre-approval letter stating the amount of loan for which you have been approved.

A pre-approval letter is not binding on the lender; it is subject to an appraisal of the home you wish to purchase and certain other conditions. If your financial situation changes (e.g. you lose your job), interest rates rise or a specified expiration date passes, your lender must review your situation and recalculate your mortgage amount accordingly.