What You Need To Know

Imagine you’ve found the perfect lot in your ideal community and you’re ready to get started building your new home when someone ask if you’re pre-qualified. Buyers often get tripped up and nervous about this question thinking they have a long and confusing process ahead of them.

The reality of pre-qualification is much easier than many buyers think. To help you avoid a lot of unneeded stress, here is the Need-To-Know on pre-qualification.

Pre-Qualification - the first step in your new home search!It is a fairly easy, informal, and quick process. First, you will be expected to supply a bank or lender with an overview of your financial background from the past two years. Then, the bank will then give you an idea of the amount of a mortgage you might expect to qualify for. With this price range and initial cost in mind as you are considering homes, you will know your expected buying power, how much you will be likely to pay as a down payment and be empowered to think like a savvy homebuyer.

Pre-qualification is not a set in stone promise from the bank, and it does not include an in-depth look at your financial history. It is entirely based on information that you voluntarily provide to the bank. It can be completed over the phone or even on the web. You are not required to work with the bank that walks you through the pre-qualification process in completing your final mortgage.

Pre-approval refers to actually applying for a mortgage. In order to be pre-approved, you’ll likely have to pay a fee, and the bank or lender will conduct extensive research on financial history. Being pre-approved means you will receive a written commitment from the bank or lender for your mortgage.