Jump Start Your Dream of a New Home

by JJ Singh
Loan Page Columnist

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Imagine this: you've been on a stakeout for the last three weeks waiting for a home in a beautiful tree-lined neighborhood to be put up for sale. The nearby high school is great and your commute to work couldn't be shorter.

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You Want That Home

Your dream home goes on the market and you don't think twice. You negotiate, set a price, and make arrangements to close the deal. Everything is in place but you haven't heard if your home mortgage is approved yet.

You're too late. Someone got to it before you did. While this bitterly dashed dream is often a reality to many, you can be smart and take care of the mortgage beforehand.

Pre-Qualification vs. Pre-Approval for New Home Loans

It is actually possible to be approved for a new home loan even before you pick out the house. There are two ways to do it:

» Pre-Qualification. This is a simple handshake agreement between you and your lender. They'll scan your credit report, ask about your income, and tell you how much you can expect to qualify for. There's nothing in writing and there are no guarantees. This is more like a free guide than anything else.
» Pre-Approval. An approval is much more formal deal. All of your personal finances are heavily scrutinized and a banker will enter into a written agreement to finance your home mortgage up to a certain amount. There is generally a fee for this type of contract.

When shopping for a new home, try getting a leg up on the competition by seeking a pre-approval so you can bid and close deals with more confidence. Home loan Pre-qualifications and pre-approvals are a great way to getting a head start on fulfilling your dreams of home ownership.

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About the Author
JJ Singh is a loan consultant in New York City. He holds a bachelor's degree in Economics from the University of Virginia.

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