Capstar buyers start the home buying process with by obtaining a mortgage pr-approval. This process, basically an evaluation that determines how much the borrower can afford to qualify for a loan, is vital.
In today’s real estate market, sellers expect buyers have one, and may only negotiate with people who have proof that they can obtain financing. And, this is how borrowers know the maximum amount they can borrow. Also, if there is any problem with their credit, borrowers will get a heads-up about it.
Pre-qualification Vs. Pre-approval
Although they sound alike, being pre-qualified for a loan is not the same thing as being pre-approved.
Prequaliying is an informal step in the loan process, and can be done over the phone. Capstar will ask borrowers to provide information about assets, income, and liablities, and may estimate how much money you can borrow. It is based only on the information you provide to the lender. Being a pre-qualified buyer doesn’t carry the same weight as being a pre-approved buyer who has been more thoroughly investigated.
With pre-approval, Capstar will check your credit and verify your financial and employment information and documentation. This confirms your ability to qualify for a mortgage and approves a specific loan amount.
As you might suspect, the pre-approval process is more formal and involved. You’ll complete a mortgage application then supply Capstar with the necessary documents to perform an extensive check on your financial background and credit history. From this data, the lender can tell you the specific mortgage amount for which you are approved.
You’ll also have a better idea of the interest rate you will be charged on the loan and, in some cases, you might be able to lock in a specific rate.