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What Does It Mean To Be Approved For A Mortgage?
By Miles Loss
You will hear mortgage people throwing around words like Pre-Qualified, Pre-Approved & Approved. What do these mean? Which do you need to purchase a home? This article will rapidly sort this out for you.

Pre-Qualified: For this only basic information would be gathered from you to qualify you for your new home loan. This would include looking at your credit and your debt to income ratio (much do you owe including the payment for your new mortgage vs. how much you earn). You would also be asked if you are working and for how long. This is a very fast and very easy process.

Pre-Approved: A Universal Loan Application {1003} is taken. Some forms may need to be signed. Income documentation may be gathered at this time, but is not necessary for a pre-approval. This would be up to the discretion of your mortgage broker. After this, your loan would submitted to "Automated Underwriting". This is a computer program that compares all aspects of the loan to specific standards. This would generate a "Pre-Approval." This does not mean that the loan will be approved with 100% certainty; however, there is a high probability that the loan would go through to final approval and close. Depending upon the results some more information may need to be gathered or your loan may need to be repackaged and processed a different way. In most cases an approval would be obtained fairly easily after you have found a property and contracted. During this phase the loan is submitted with a "to be determined" address. When you contract on a home an actual address would be entered. Normally after the pre-approval is gotten and while you are looking for a home all the documentation would be gathered and disclosures would be signed by you. This would save time when you

actually do find a home.

Approved: After the loan is pre-approved, you have found a property and all needed documentation is gathered, it is sent to the underwriter. The underwriter may inform me that additional conditions need to be met. These are commonly referred to as "Conditions to for Docs". This simply means these items are needed before the lender will draw your closing documents. After these conditions are met, your loan is approved. This is confirmed to you immediately and a "Clear to Close" order is given.

As you can see from above a Pre-Qualification will just give you an idea if you can even obtain a mortgage. The Pre-Approval is what you need to start shopping for a home. You would be issued a "Pre-Approval Letter" that you would present when you sign the contract. Finally, after you are approved, you would close on your new home. It is important to understand this and other aspects of the home buying process so you can get the most out of your efforts. Always make sure you are prepared and do your home work. This will make the home buying process much easier.

Miles Loss
Licensed Mortgage Broker

Mortgage  Refinance  Home Purchase

Miles is a Licensed Mortgage Broker with over 20 years of finance industry experience. Miles is known as the "go to guy" by the Realtors and real estate investors in his area for both Residential & Commercial Mortgages. Miles brokers mainly in Florida but also covers GA, TN, NY and IN.

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