Orlando Florida | Pre-Approval is Key!
July 3rd, 2007 by tisnerGuest Author | David Podgursky
When buying a home, it is very important to be Pre-Approved for your mortgage in advance. The reasons for this vary from calculating affordability to presenting a stronger contract. The issue is that the definition of this Pre-Approval varies depending on the context in which it is used. This guide should help you understand what Sellers are asking for when they advertised "Pre-Approved Buyers Only".
The phrase "Pre-Approved" brings up a question of semantics. The best way to further this discussion is to define the terms Pre-Qualification and Pre-Approval.
Pre-Qualification is a process whereby the buyer’s income, credit and assets are analyzed. It is essential that all of these factors are weighed to give you a legitimate chance of getting the loan approved. The findings in the Pre-Qualification will also help you and your Realtor decide the home prices to search in the MLS. This prevents falling in love with a house just to find up that is $50,000 out of your price range.
Pre-Approval is a step PAST what you see above. It is actually only available after your complete loan file is submitted to a lender. At this point the lender will underwrite the loan file and come back with a Conditional Approval – a.k.a. a Pre-Approval. This is only a Conditional Approval because there will be conditions that the lender places on the loan that must be met prior to closing. After these conditions are reviewed and signed off on by the Underwriter, the loan should have Final Approval or Commitment and be Cleared to Close.
When trying to satisfy this Seller requirement, a buyer should realize that the difference in a Letter of Pre-Qualification and a Letter of Pre-Approval is much more than just semantics. It can take between a few days and a couple of weeks to get a pre-approval. It all depends on the particulars of the loan file and the lender itself. This is why it is important to get started on the loan application before shopping for the property
A Letter of Pre-Approval is the document that is proof that the lender has already approved the buyer for a loan and is just waiting on a property to put with the loan. This is the "Golden Ticket" that you will need to have in hand to successfully move along the path to home ownership.
For More information on Loan Pre-approval, follow this link to Florida Mortgage Loans | Pre-Approval vs Pre-Qualification – a lesson in industry semantics