Obtaining a mortgage can be the largest financial transaction many people will participate in throughout their entire lives. With such a big investment on the line, it is to be expected that there are multiple steps to achieve that ultimate goal of homeownership. To many the home financing process can appear daunting or scary but with the right preparation and team alongside you, the experience can be smooth and efficient. 

Above all, our goal is to provide the best experience possible for our clients; we’ve cultivated a series of articles that will take you through the mortgage process step-by-step from start to finish. Each article will go into detail on each of the defined phases of the mortgage process:

1. Preparation: Pre-qualification and Pre-approval
2. Shopping: Searching for your home
3. Application: Completing the full mortgage application
4. Processing and Underwriting: What to expect
5. Closing: Crossing the finish line

It is our intention that this series will make you feel prepared and confident in your journey. 

We’re kicking the series off here, where you will take a deep dive into how exactly you can get started toward homeownership! Without further ado, let’s take a dive into the very first phase of the process… Preparation: Pre-qualification and Pre-approval!

Beginning the Mortgage Process

If you are contemplating the idea of purchasing a home, there are some foundational steps to think about before jumping right in. 

First, the current housing market strongly favors sellers since there is a limited supply of homes for sale. This means more buyers will be looking at the same homes and will potentially pose competition for you when you make an offer. You might be feeling discouraged already, but don’t fret! One way to ensure you stand a chance against the competition is to reach out to a lender BEFORE you even start your search. When a buyer presents a pre-approval letter from a quality mortgage company, this shows the seller and seller’s agent that you are serious about your offer. A pre-approval letter in hand reflects your dedication to the process, showing you have started the financial process which will hold you in higher stead than those less prepared. So what exactly happens when you reach out to a lender?

When you reach out to a mortgage lender, you will have the opportunity to either get pre-qualified or pre-approved… Yes, there’s a big difference…

Pre-qualification

The term pre-qualification and pre-approval are sometimes used interchangeably, however, they are NOT the same thing. A pre-qualification is the starting point of working with your lender where you give them some basic information regarding your finances and they give you a rough estimate of rates and what loan amount you could qualify for. It is NOT a full examination of your income, debt, assets, credit, etc., it is all just based on information provided by you. This means if you do not give full or accurate information the rates and amounts could be off. 

What is the point of a pre-qualification? Well, this will give you a good idea of the price range you should be looking in for your home purchase. It could show you that you can afford more or less than you expected so it is an important place to start the journey. You do not want to get you heart set on a home that is outside of your budget and this step will help with that.

Pre-approval

Now that we know that a pre-qualification is not the same as a pre-approval, what is a pre-approval? A pre-approval is a letter from a lender letting the sellers and seller’s agent know that you have been working with a lender and that they have evaluated your income, debt, assists, credit, etc. and determined that you would be eligible for a loan up to a certain amount. With Cambria Mortgage, we are able to provide our borrowers with a fully underwritten pre-approval upfront that takes your buying power to the next level.

What does it mean for a pre-approval to be fully underwritten? When you are ready to be pre-approved, you will complete a loan application and provide documents to your Mortgage Consultant related to your income, assets, etc. Your application will be processed and evaluated by our underwriting team to determine your eligibility. Once this process is complete you will know that your loan is on the fast track to closing. There will still be a few additional steps, however, you will have the golden ticket of a pre-approval letter to use when searching for your new home.

Like many instances, the first step can be the hardest to take… but don’t allow the fear of the unknown hold you back. There is a lot waiting for you on the other side of that pre-approval. If you’re ready to take that first step and connect with a mortgage professional, visit CambriaMortgage.com or call 952-942-0110. We’re here to help!