Should I get pre-qualified or pre-approved for a mortgage ? Pre-Qualification A pre-qualification is typically a verbal assessment of a borrower’s buying power based on their stated income, debts, down payment, and credit report. The lender would likely take your information over the phone or sometimes an office consultation. Based on the verbal information discussed and the credit report a lender typically issues a pre-qualification letter (sometimes titled pre-approval letter, despite being a true pre-qualification). There is usually no cost for a pre-qualification. Pre-Approval A pre-approval is a fully verified assessment of a borrower’s financial situation. Documentation such as pay stubs, bank statements, tax returns and W-2s are collected and reviewed. Depending on your financial history, other documentation such as a divorce decree, bankruptcy schedules and discharge, business returns, or other documentation could be required. A tri-merged credit report would be required and employment and assets would be verified. The mortgage file would be reviewed by an underwriter possibly resulting in a conditional commitment. A conditional commitment would require you to provide additional documentation or explanation letters to receive a full pre-approval. Once you receive the final pre-approval a commitment letter would be issued from the lender. There is normally a minimal fee for a pre-approval. Pre-approvals are typically good for 90 to 120 days depending on loan type. Read the full article to see when a pre-approval may be necessary: http://goo.gl/ltBFnC
