Tuesday, May 18, 2021 / by Raj Jaggi
First time home buyers - this is the time of the year and the 'Year' to buy a new Home on Long Island! The market is hot and the interest rates are still LOW!!
Inventory is limited and when you are trying to put in a new offer the competition is endless.
So how can you get your offer ahead of other home buyers?
We will explain you the basic terms so that you will a direction on what can be done next.
Finance and Lending can be complicated terms to start with, so we will just explain the basic terms like pre-qualification, pre-approval & pre-commitment.
Remember we are here to help you out with any of these, once you are ready to BUY your Dream Home!
What is Pre-qualification?
A pre-qualification is informal option for a borrower to consider when working with a lender. A borrower can review his or her income, assets, and debt over the phone with a loan officer, and the loan officer will tell the borrower how much of a mortgage he or she will likely qualify for.
The pre-qualification is not legally binding for the borrower or lender; rather, it is a recommendation for the ballpark mortgage amount that the borrower could likely afford.
With a pre-qualification, the loan officer does not actually review the borrower’s credit report, which is an important step in moving forward with official financing. A pre-qualification is the least impressive option to a seller who is looking for a serious home buyer.
What is Pre-approval?
A pre-approval shows more of a commitment than a pre-qualification to a home seller. A pre-approval means that the loan officer has reviewed the borrower’s financial information, including:
W-2 Statements, Current Paystubs, Recent Tax Returns, Proof of Income for Spouse/Partner, Bank Statements, Credit Report
A pre-approval shows that a borrower is legally qualified to borrow up to a certain amount of financing. It is not binding, but it shows a home seller that the borrower/buyer is at least committed enough to have gone through the process of a pre-approval.
What is Pre-commitment?
The most impressive option of the three (to a home seller), and the most intensive, is a pre-commitment. With a pre-commitment, the borrower has submitted a pre-approval application, and an underwriter has reviewed the borrower’s application and determined that the borrower will definitely qualify for a specific loan amount. A pre-commitment letter is proof that a borrower will qualify for a set amount of financing, and it also outlines what type of loan, the loan terms, etc. With a pre-commitment letter, a buyer essentially is saying to a seller, “I am ready to buy your house.”
How Long does it take to get a pre-approval, pre-qualification or pre-commitment?
Timing varies from lender to lender, as well as the borrower’s availability and if they already have all of the necessary documents on hand. Generally, a pre-qualification can take up to an hour; a pre-approval can take up to a day; and a pre-commitment can take up to a week
Give us a call today 516-996-3633 & let us help you achieve your Dream of buying a new home. With out varied resources & expertise, we can recommend you with what would be best for you & your family!