What is the Difference Between a Pre-Approved NJ Home Mortgage Versus a Pre-Qualified NJ Home Mortgage?
One of the easiest ways to facilitate the purchase of an NJ home mortgage and subsequently the purchase of your home is to get a pre-approval for a home mortgage from a mortgage lender. When you seek counsel from a mortgage lender, they will either “pre-qualify” or “pre-approve” your home mortgage application. It is important that you understand the difference because the two terms have become synonymous over the years. This can have unfortunate consequences for the borrower hoping to secure a home mortgage.
A Pre-Approved NJ Home Mortgage
The pre-approval of an NJ home mortgage is the actual process of applying for a loan and sending your loan application through the underwriting process. You will receive a commitment for a home mortgage loan up to a certain amount that is conditional upon an appraisal of the desired property meeting the bank’s approval and the purchase price.
The greatest advantage to the pre-approval of an NJ home mortgage is time. When you need an appraisal, the time between the signing of a purchase agreement and the day of the closing is in the range of 1 to 2 weeks whereas the entire loan application process can take anyway where from 30 to 45 days.
When applying for a pre-approval of an NJ home mortgage, you should apply for the maximum. You can always reduce the home mortgage amount in a day or even less, but increasing the NJ home mortgage amount is the equivalent of going through the approval process all over again.
A Pre-Qualified NJ Home Mortgage
Obtaining a pre-qualification of an NJ home mortgage is usually done just to get a quick indication of whether or not you qualify for a loan. A pre-qualification is a brief glimpse at your assets and liabilities, your annual income and a determination of how much of a home mortgage payment that you should be able to afford assuming that none of these conditions change before the settlement date.
At this point, after reviewing these cursory factors, a mortgage lender will issue you a pre-approval certificate or letter on company letterhead indicating that they have reviewed your finances and that it appears you qualify for a home mortgage loan for a certain specified amount of money. What is important to note is that a “pre-qualified” home mortgage is absolutely not a guarantee that you will get the loan. It is only an estimate.
Pre-Qualify Versus Pre-Approval NJ Home Mortgage
As stated, unfortunately these terms seem to be interchangeable in the industry so make sure when dealing with a mortgage lender that you ask specifically what type of approval you are receiving. One easy way to tell if you’ve received a “pre-approved” NJ home mortgage is if you’ve signed anything. If you only given information over the phone, then your approval is nothing more than an estimate of whether you qualify for a home mortgage.