Pre-qualification: what is it?
By: lizzy james | Posted: 10th June 2009
Summary: if you are one person that needs your things done within an estimated time, then you must know that for you to buy a home you need to be pre-qualified.
What is pre-qualification?
A pre-qualification is an estimate given by a lending institute to a prospective home buyer based on the unverified information the borrower gave to the lender. It means that the lender will only lend the home buyer the sum in lieu that the information given is correct. However getting pre-qualification letter is no guarantee that the lender will finance the mortgage. Normally in the lettter, a clause will be inserted to relieve the mortgage company of any form of liabilities.
Is pre-qualification the same as pre-approval?
No, these two form of letters are different, one has the potential of working faster than the other. Pre-approval may be time consuming and difficult to obtain but it works better and faster than pre-qualification. Here the lender verifies the borrower's relevant document to ascertain the authentication of each declared document.
After this the mortgage company will make a preliminary approval of the loan and give commitment that the company will complete the loan process to finalize the sale.
Benefits of pre-qualification
You can determine exactly how much is the mortgage loan a lender is giving you based on the information you gave him. This will afford you to seek out properties within the price range of the home loan.
It gives you the confidence that you may go ahead with your plan. Home loan pre-qualification is not that difficult, and it is the first step you need to take if you actually want to apply for a home loan.
It affords the estate broker to facilitate a quick search for you within your specification. The broker knows your price specification, so he can search properties with that range. This will save both real estate broker and you a lot of time and energy.
Pre-qualification puts you at an advantage because you can have a better chance negotiating with the seller of the property. You can actually get the home at a discount because you are pre-qualified.
Pre-qualification unlike pre-approval is quite simple to get. With high IT system in place, a person can discuss with a lender and the information can be given to him in less than 24 hours. This can be done via the internet or by phone.
You need to provide the lender with details about your current mortgage amount, your annuals, and your household income and so on.
Another advantage is that the information you input online is protected against cyber thieves. This is because such information is encrypted so that all your personal data can be protected.
Pre-qualification also helps you to structure any offer proffered to you by the seller. By this you can actually get a seller to sell to you at a discount. This you cannot do without a prequalification.
To get the best home within your price range and to get that home faster than expected, you need to be pre-qualified.
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Chandler AZ Real Estate
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Tags: better chance, real estate broker, confidence, mortgage loan, mortgage company, authentication, home loan, liabilities, pre approval, loan process, pre qualification, qualification letter, prospective home buyer