July 27th, 2018 10:32 AM by Andrew Walter May CEO
Before you begin to shop for a new home, you should set up a time to meet with a professional American Dream Residential loan officer so we can figure out how much you can afford. This will put you in a better position as a buyer. That’s when it is important to understand the distinction between being pre-qualified for a loan and pre-approved for a loan. The difference between the two terms will be crucial when you decide to make an offer on a house.
To get pre-qualified for a loan, we collect information about your debt, income, and assets. We’ll look at your credit profile and assess goals for a down payment and get an idea of different loan programs that would work for you. We will issue you a pre-qualification letter. We don't recommend, and rarely put into the prequal letter a dollar figure. Newbies do that. Why let your seller know you are qualified to purchase a $750,000 home when you only want a $400,000 home? We'll provide professional, seasoned advice all along the way.
It is important to understand that a pre-qualification letter is just an estimate of what you are eligible to borrow, not a commitment to lend. Getting pre-approved for a loan gives you competitive advantage when the time comes to bid on a home because you have been approved for a loan for a specified amount.
To get pre-approved, you will complete a mortgage application and provide ADRMortgage with various information verifying your employment, assets and financial status such as W-2 forms, bank records and credit card statements. We’ll review your mortgage options and submit your application to the lender that best meets your needs. Once the application process is complete you will receive a pre-approval letter indicating the amount your lender is willing to lend you for your home.
A pre-approval letter is not binding on the lender; it is subject to an appraisal of the home you wish to purchase and certain other conditions. If your financial situation changes (e.g. you lose your job), interest rates rise or a specified expiration date passes, your lender must review your situation and recalculate your mortgage amount accordingly. We had one customer that stopped paying their mortgage, credit cards, and auto when they were moving here. Bad decision. Lenders pull your credit score before you close. If they don't like what they see - bad news for you on your pre-approval.
Also, you'll want to avoid that new yacht. We know it's tempting to be like Tiger Woods and go for the "green" - but please avoid purchasing yachts, expensive toys, or a new vehicle during the mortgage process. Unless of course, you want to pay more.
We always compete on price and speed. Most banks no longer provide a Good Faith Estimate. They give you a Good Faith Worksheet or some other name that sounds like a GFE. Please get a GFE before you call us, so we can show you what we can do. We saved one borrower $30,000 a year in payments. Not bad. What was he saying about that Yacht?
Trust, Honesty, Respect, Speed, Commitment, and a long term relationship. That's what you can expect from ADR.