What Is A Pre-Approval When Applying For A Mortgage?

What is a pre-approval?

pre-qualification

When you are applying for a mortgage the first thing you may have heard of is a pre-qualification. A pre-qualification happens over the phone. I start by asking some basic Questions. Do you know what your credit score is, what is your income, what do you do for a living how long have you been doing it, what is the total amount of your debt, and do you have any money saved for a down payment? I also ask if you are looking for down payment assistance? Based on that alone, I can usually say whether you are pre-qualified.

Pre-approval

A pre-approval is different. A pre-approval means everything has been entered into a website that goes right through Fannie Mae and Freddie Mac’s website. I start by gathering all your documentation.
• Pay stubs – I use your pay stubs to calculate your income
• Credit report – I run your credit through our mortgage companies name in order to use it when we run it through the website.
• Bank statements, 401k, all accounts – I will need to evaluate all accounts in order to determine where all your money is coming from.

After all the documentation is gathered everything is entered and ran through Fannie Mae and Freddie Mac’s website, and we get an approval. That means you’re pre-approved.

Underwritten approval

However, I like to take things even one step further when you are applying for a mortgage. I take all the documentation and information and send it to an underwriter. This allows the underwriter to work out any issues and gather additional information before we get further into the process. You don’t want to be six weeks into the process when you find a house that you’re in escrow with and discover something’s changed. This allows the process to run smoothly. The underwriter will have conditions, but that’s pretty standard. It is a lot easier to get those conditions done right away to close quickly.

So, I do a pre-qualification over the phone, a pre-approval in person or via the internet, and hand everything over to the underwriter for a smooth and quick transaction. Having an underwritten approval is the best way to help you negotiate, and your Realtor negotiates on your behalf. The best deal for you is if you already have a pre-approved loan.