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What to Expect During the Mortgage Pre-Qualification Process
Pre-qualification for a mortgage is one of the first steps to take before you start looking for a new home. This is how to learn where you stand and what you can borrow. It can help you establish a starting point and a budget range.
Check out this complete guide to what to expect for the pre-qualification process. To learn more or get started with your pre-qualification, contact Direct Home Lending in Corona, California.
Pre-Qualification Vs. Pre-Approval
Many people are confused about the terminology in the market. The truth is unless you are regularly in the process or familiar with the industry, you simply don’t know the ever-changing terms.
Pre-qualification and pre-approval are two different things. Years ago, people were just pre-approved when they had a home they were interested in. However, the market has become substantially more competitive in recent years. You have to be ready to go before you even start looking for a home.
A pre-qualification is the first step. This uses your credit report and reviews your basic financial information. This step indicates your borrowing power so you have a general price range to work with as you search.
Next is the pre-approval process. This gets into more detail with the credit company to determine whether or not you would be approved for that pre-qualified amount should you find a home to make an offer on. This is their offer to finance you, but there is no guarantee you will be 100% approved when the time comes. It’s the closest you can get to full approval until you have a purchase contract in place and an address for application.
Apply for Pre-Qualification
For pre-qualification, you first have to apply. Since this is just a basic starting step, you won’t have to provide nearly as much information as you will later in the process.
The pre-qualification is really primarily just an estimate to give you a base for your shopping. With the estimate, you know generally where your budget sits in the housing market.
The forms are simple, but you will need to sign as you are making a formal request to be pre-qualified. Whether or not a credit check is required will depend on the lender’s policies. In most cases, a soft credit check is run, which isn’t likely to impact your score.
Documents Needed for Pre-Qualification
Pre-qualification is a basic overview. In the application for qualification, the results will be based on the accuracy of information that you provide. While you won’t have to submit your proof of income or assets at this point, you still need to get the information as accurate as possible.
We recommend looking up your pay and your bank account to get your answers correct for the best results. Later, when you move through pre-approval and eventually mortgage approval, you will provide far more extensive information for the process.
Timeline for Pre-Qualification
Since pre-qualification is a basic estimate and not an official approval or even a pre-approval, the turnaround time is fairly quick. In most cases, you will have pre-qualification results within 24 hours. Some companies will even provide you with an instant response.
The timeline heavily depends on the lender, but pre-qualification is generally fast.
Keep in mind that pre-approval takes a little bit longer. However, pre-approval is faster than full mortgage approval. The process from application to closing on a mortgage could take 30-60 days on average and potentially longer.
When to Choose Pre-Qualification
If you’re just beginning to think about looking for new homes, pre-qualification might be a good choice for you. Pre-qualification could be helpful if you have never purchased a home before and are not sure where to start with the process.
It can be a useful tool for giving you a shopping range.
If you want to be able to make an official offer on a home, you need pre-approval to do so. This is slightly more extensive of a process but it will be more substantial to a seller and puts you in the running as a serious buyer.
Consider pre-qualification a resource for your own purposes. Pre-approvals are a resource for the seller and the lender to ensure that your approval is likely. This will be a valuable tool when you’re ready to start shopping.
Borrow Reliably for a Home with Pre-Qualification
When it comes to pre-qualification or pre-approval, Direct Home Loans is here to help in the Corona, California area. From pre-qualification to the closing of the sale, we’ve got your needs covered.
Pre-qualification is a helpful step for planning your home-buying experience, particularly for new buyers. Don’t forget to work towards a pre-approval when you’re ready to actively begin shopping for a home.
You deserve reliable and efficient service when it comes to choosing a new home. Let us help get you in the home of your dreams.