Buying a Home



Pre-Approval Process

Many buyers apply for a loan and obtain approval before they begin the search for the home they want to buy.  Unless a person is going to pay cash for the home, a loan application will have to be made sooner or later.  Pre-qualification by a lender is a simple procedure by which you get an opinion as to how much you qualify for and can discover any obvious obstacles that might cause problems.  It is a good idea, but it is not as thorough as pre-approval.

Pre-approval entails making a complete application, ordering the credit reports, verifications and everything for the borrower.  The Mortgage Company will issue a commitment subject to a specific interest rate and points and the satisfactory appraisal when a property is located. There is usually a time limit placed on pre-approval commitments.  Youll want to be ready to look at homes and make a decision after you receive your pre-approval commitment.

There are several distinct advantages to using the pre-approval program:

  • You look at the "right" homes that you can afford.  Choosing a home that you may not be able to afford wont disappoint you.
  • You save money dealing with a seller who is comfortable about tying up their home with a party who has a definite loan commitment.  This is one less contingency for the seller to be concerned with.
  • You close more quickly because in most cases, the thing that takes the most time is getting a mortgage.  The credit reports and all of the verifications take time to be mailed out and returned.
  • You minimize trauma of not knowing whether or not you qualify.


(Click for Flow Chart of Pre-Approval Process)

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