When you start looking to buy a house, you may want to become pre-qualified or pre-approved for home-buying. These two terms are used loosely to describe being “checked out” when you are house-shopping. Pre-qualification is done more often than pre-approval.
Pre-qualification does not require that a loan application be completed. A loan officer can issue a written opinion about whether the borrower will qualify for a home loan.
To do this, the lender will make inquiries about debt, income, and savings. This information is gathered more informally than in pre-approvals. The loan officer may get the information verbally or in writing. The officer will also check the credit record of the borrower.
As a realtor, I prefer home-buyers pre-qualified. This way, you have an approximate amount or price range you can be looking at. Plus, it gives me some confidence you would be able to fulfill the loan contingency.
This means you have completed a loan application that has been approved by your lender.
A pre-approval is usually done at a certain loan amount. The lender estimates what the interest rate will be when the loan is made. Estimates are also made about other costs such as property taxes and homeowners insurance. A time limit is also set for how long the interest rate will be locked in.
When you do a loan application to be pre-approved, you provide debt, income, and savings information for the lender to review and approve. Once you decide on a home to buy, the property must also meet the lender’s guidelines.
If you have questions about Pre-Approval, contact the NAS Realty team: Barb Malm at 308-991-7020, Janet Boehler at 308-991-3024, or Kelly Morten at 308-991-2332.