A mortgage is money a buyer borrows from a lender to pay for property. The mortgage can be a first or second mortgage. Many people decide to become pre-approved for a mortgage, rather than find property and then try to acquire a mortgage from a lender.
Mortgage pre-approval means a lender or bank has researched the borrower’s credit history and determined that the borrower can obtain a mortgage from them. The pre-approval may only last a certain amount of time such as 90 days.
How Time Consuming Is the Pre-approval Process?
Some borrowers consider it extremely time consuming because it requires:
- Finding a lender
- Completing a mortgage application
- Provide the bank or lender with all of the necessary documents
- Wait for the lender or bank to make the pre-approval determination
If approved, the borrower will find out how much the lender is willing to loan them.
By getting pre-approval, the borrower will know just how much they can spend on a property. For example, many people first look for a property, then try to obtain a mortgage. Sometimes, they may lose out on a property because a lender is not willing to loan them money that they need to buy the home. With pre-approval, a borrower knows the price range of the homes that they can afford.
No. Being pre-qualified is different because it is only for informational purposes. A borrower who is pre-qualified is given an idea of how much money a bank may lend them. The amount is based on the borrower’s:
- Assets, and
However, getting pre-qualified does not mean a borrower can obtain property using the qualification letter.
"Loan origination" describes the process of a borrower applying for a mortgage loan. The borrower goes through the same process that they did for becoming pre-approved and:
- Negotiates loan terms
- Finalizes the loan application
- Completes the approval process
Yes, a mortgage attorney can assist you in understanding the pre-approval process. They can also help you in determining how to proceed with your quest of getting a mortgage.