Qualifying for a loan
You have probably heard the words “pre-approval” and “pre-qualification” bandied about by people who are giving or getting a mortgage on a new home. Basically, a pre-qualification is based on information the buyers have provided but that hasn’t been verified. A pre-approval in more in depth and requires documentation to back up statements about finances. Pre-approvals usually require hard credit checks (which can affect your credit score, though minimally) while pre-qualifications don’t. Click here for a more detailed comparison. Historically, home sellers have had more confidence in a prospective buyer’s ability to consummate a real estate transaction with a pre-approval vs a pre-qualification.
Through underwriting: a step further
Now there’s an even more thorough process that a buyer can go through prior to writing an offer on a home. They can request that their loan application be reviewed by the underwriters (who have additional questions and look even more carefully at the documentation provided). When a buyer has “gone through underwriting”, it’s yet one more level of verification and provides the seller with even greater confidence that the buyer will have no issue obtaining financing.
Why do these nuances matter?
So why do you care? Let’s say you are a home buyer and you are writing an offer that is contingent on receiving a mortgage. If you can submit a letter from the lender that says you’ve already been verified by the underwriting department, vs offering a pre-approval or, even less convincing, a pre-qualification, your offer is stronger. Particularly in a competitive situation, you want to be sure all terms and conditions of your offer are as appealing as possible to the seller.
If you are relocating to the Philadelphia/Main Line area, please go to my blog page and search for posts using the relocation tag. Contact me to discuss your Philadelphia area relocation! jen@jenniferlebow.com/610 308-5973
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