Have Your Credit Pre-Approved

Getting a credit pre-approval means you receive a loan commitment from your mortgage company before you have found a home, based on a review of your credit and finances.  A credit pre-approval shows sellers that you're a qualified buyer and helps you establish a clear price range. 

The credit pre-approval process
The process of applying for a credit pre-approval is the same as a typical mortgage application, except that it doesn't include information on the property you will purchase.  Your loan officer collects information on your credit, income, assets, and debts, and sends this information through an underwriting system.  If the underwriting process determines that you qualify for a loan, you receive a loan commitment for up to a certain amount, which is contingent on the property meeting certain criteria. 

Benefits of having your credit pre-approved
There are many good reasons for getting a credit pre-approval before you buy a home:

• It makes your home search more efficient by allowing you to focus only on homes you know you can afford.   
• It lets sellers know that you can back up your offer, so they don't have to worry about whether you can get a loan. 
• It lets you know early in the process if you will have difficulty getting pre-approved, so you have a chance to address problems before finding a home. 
• It gets most of the mortgage process out of the way up front, so you can complete your transaction quickly after you find a home.

Pre-qualification
Like having your credit pre-approved, getting pre-qualified can help you determine your price range.  The difference is that pre-qualification does not involve a credit check and is based only on your stated income, assets, and debts.  Because of that, a pre-qualification can't give you as precise an estimate of your buying power as having your credit pre-approved.  It also doesn't carry the same weight with sellers because your credit is still a question mark.