There are two primary ways to show buyers you can get a mortgage to purchase the property they are selling:  getting pre-qualified and being pre-approved for a loan. Many borrowers confuse these terms, and often believe they mean the same the thing. From a seller’s perspective in an active market like San Diego, there is a big difference between a pre-qualification and a pre-approval. That is why it makes sense to work with knowledgeable mortgage professionals to ensure you increase your likelihood of success.

Community Mortgage is a mortgage broker serving clients in the greater San Diego area. If you want to secure a home purchase loan, we help you navigate the entire process from submitting the application and getting pre-approved, to obtaining a loan commitment. By understanding your financial situation, our experienced mortgage consultants work to expediently close the loan and help you complete the purchase. Call our office at (619) 692-3630 today.

WHAT DOES PRE-QUALIFIED MEAN?

Getting pre-qualified is a preliminary step in the mortgage application process that generally involves the borrower giving a mortgage broker or lender an overview of his or her financial situation. This includes providing information about the borrower’s debt, assets and income so that the lender or broker can make a determination about a suitable loan amount.

However, a pre-qualification does not consider the borrower’s credit report or the buyer’s ability to afford a home. In short, the purpose of a pre-qualification is to enable a borrower to clarify his or her goals. At the same time, the mortgage broker or lender can explain the various mortgage options and make recommendations that suit the borrower’s situation. It is important to note there is no guarantee a borrower will be approved for the pre-qualified loan amount.

WHAT IS A PRE-APPROVAL?

Being pre-approved is a further  step in the process, which involves a more thorough analysis of the borrower’s financial picture. This requires completing a mortgage application and providing the lender with documentation such as pay-stubs, W-2s, tax returns, bank account statements, and other information needed to assess the borrower’s financial situation. The lender will also request a credit report from one of the credit reporting bureaus – Equifax, Experian or Transunion – to verify the borrower’s creditworthiness.

Based on this information, the lender determines the specific mortgage amount for which the borrower will be approved and estimates the applicable interest rate. The lender will provide the borrower with a written conditional commitment for the exact loan amount, which enables the borrower to search for a home at an appropriate selling price.

The main benefit of a pre-approval is that the borrower will have more leverage in negotiations with the seller, which is important in a market like San Diego. A potential seller is more likely to agree to a deal if the borrower is closer to obtaining a loan. Once the right home is selected, the loan application can be completed and the lender will be able to issue a loan commitment.

WHAT IS A LOAN COMMITMENT?

A loan commitment is the next step and is only issued when the lender has approved the mortgage application and intends to make the loan. At this point, the home will need to be appraised, and the borrower’s income and creditworthiness will be assessed once again to ensure that the borrower’s financial situation has not changed since the application was initially submitted.

SAN DIEGO MORTGAGE BROKER

Ultimately, obtaining a pre-qualification, a pre-approval and a loan commitment are all necessary steps that must be completed before a loan closes. At Community Mortgage, we help you navigate the entire process. We highly recommend getting pre-approval for a loan over just prequalified, because homes in San Diego sell so quickly and you need to be able to compete with cash offers.

We help you collect all the necessary financial information, assess your credit rating and submit a complete package to a lender in our extensive network. Along the way, we explain all the details, keep you fully informed on the progress of your loan application, and strive to ensure that the loan closes. Our objective is to build the San Diego community by educating our clients and helping them achieve the dream of owning a home. Call our office today at (619) 692-3630 or fill out a contact form for a free, personalized consultation to learn about your best mortgage options.