It’s Just Smart to Get Pre-Approved Before You Start Your Home Search…..
It is imperative to understand the difference between getting pre-qualified and pre-approved. Getting pre-qualified is only the first step in the mortgage process, and is just a rough estimate. It is often based on basic information supplied by the applicant and does not examine one’s credit report or an indepth analysis to determine if one can actually afford a home.
Getting pre-approved is the next step in the mortgage process and will involve an actual mortgage application, an extensive look into your finances, and will often include discussion about which types of loan would best fit your needs. Pre-approval will tell you the exact loan amount you will qualify for. Pre-approval is also beneficial in that it legitimizes a buyer’s ability to follow through on their offer. It is strongly recommended that a potential buyer gets pre-qualified and pre-approved prior to starting the home search process for several reasons. First, you will know exactly what you can afford. Second, time is precious to both buyer and broker….so it’s best to know. And third, you will be able to move quickly once you have found the home you want. Be aware that a pre-approval is NOT a commitment to lend; it is always subject to the appraisal, clear title, and any documentation required by your lender.
The loan commitment is the final step in the process and occurs only when the bank is certain that it will lend you a set amount and on a specified property. And since banks will only lend the LESSER of the sales price or the appraisal value, it is important that the appraisal comes in at or above the sales price. What if the appraisal comes in below your offer price? Then the seller will either have to be prepared to renegotiate at a lower price (since, for example, a lender won’t lend $300k on a house that only appraises for $250k) or the buyer may have to bring more cash to the table. And also be aware that your credit report will be checked again just prior to closing, so PLEASE do not do anything that could lower your score (eg. purchase a car, check your report, etc.)
Conventional vs Non-Conventional Home Loans…..
http://www.quickenloans.com/blog/the-difference-between-conventional-and-non-conventional-home-loans
What You Need to Know About FHA Loans….