subject: Why Bother To Be Pre-approved? [print this page] To be pre-approved takes time and effort, but it is in the best interest for the Ca first time home buyer to have the process done. Pre-qualification is basically the determination by a lender of your ability to borrow and how much they may lend you. There is no binding agreement between you and the lender by being pre-qualified and there is no guarantee that you will actually get a loan.
Being pre-approved on the other hand is a much more in-depth and comprehensive process. In this process, the lender will ask that you submit all the required documents and have all the forms filled and duly signed, just as if one was applying for a loan. This will then be submitted to their Loan Underwriter for review. The Underwriter, will look for certain criteria including your credit score. A good credit score is very important and it covers several areas not just your finances.
Your credit score is a three digit number that is calculated by taking into consideration several factors. Your credit history, the amount of money you can borrow on credit. Your job history or how long you stay in a job or if you move around a lot. This will also be the same for where you live, as this can give an indication as to your stability or any other under lying problems. There are other factors that will be taken into account as well. That is why your credit rating is so important and you should guard it carefully.
But once a Ca First Time Home Buyer is pre-approved, you now have a commitment from a lender giving you a loan for a specified amount in writing. This approval will be subject to conditions, inparticular there must be no change in your financial position for the time period specified on your contract. Pay attention to the interest rate at the time of approval, if it is attractive lock it in for the approval period, if not possible do so definitely on settling on a house.
It is to your benefit to get pre-approved for a houe loan before looking for a house. It gives you an objective analysis of your credit position and from this where needs improving and how to maintain it. Knowing how much you can borrow and what first time home owners assistance you are good for, and how much tax credit you are allowed is also a big benefit. It also shows the seller how serious you are.
But most of all it will empowers the Ca First Time Home Buyer with the ability to make confident decisions when purchasing their first house. And that decision will make them happy for a very long time.
