I've been prequalified for a home loan, will I be preapproved?
Asked by
goose756 (
655)
September 26th, 2012
I know next to nothing about this process so any help is appreciated. I’ve been prequalified for a home loan – I know this isn’t the same as preapproved, but are my chances of getting preapproved pretty likely because of it? I provided 100% accurate information, so is it just a verification of that info?
Thanks everyone.
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5 Answers
Unless you go out and spend a lot of money racking up credit card bills, or fail to pay your bills, I would think being prequalified would also mean preapproved. Some real estate agents won’t even show you a house unless you are prequalified.
Be aware though, that some banks and mortgage companies preapprove people for amounts of money they aren’t really able to spend on a house. Back when I was looking for a house I knew exactly how much I was willing and able to pay per month. The bank preapproved me for a lot more than that, but I kept my head and bought the house I knew I could afford. I’ve known people that have said “but the bank said I’m preapproved for a 200,000 dollar house, so they should know if I can afford it or not.”
Take into consideration escrow, you might want a new car someday, you might want to go on vacation, you might want to eat.
Good luck!
Absolutely no large purchases before closing, as @chyna suggests. Pre-qualified means they believe you to be solvent at the moment but they will recheck everything before closing.
It is true that they pre-approve often for more than what you need. If you want an estimate go to homes.com and you will often see a calculator so you can estimate how much your mortgage will be about. Find out from the bank, how much is going to be your interest rate and how many points you can buy. When purchasing the home you can put a certain amount towards points and it will help lower your interest rate some. (Whatever you do, go with a fixed rate.) Flexible rates are for suckers, unless you plan to sell the house in 3 years time or so. Rates are good right now so, fixed is better.
Depending where you live and the type of house you buy, there are several things that should be calculated into your final monthy costs.
1. property tax. (most realtors will tell you what was the property tax for the property the year before, so divide that by 12 months) Has to be paid in advance at closing for the year.
2. Insurance, Ranges are wide. When you decide on a home call about and compare rates.
These two things will be collected with your mortgage.
3. Hoa fees. Some states don’t have these, but find out which properties have the highest rates. They can go from 25 a month to 400 a month. (it begins to feel like renting)
4. Condo fees are like HOA and sometimes can be lumped together. I recently went looking at some condos that charged both and wanted 600 dollars a month extra combined.
Some include some utilities and some don’t include anything.
Then there is the final and last approval. Where you decide on a home and maybe it is being over sold and the back will only approve it for a much lower price. Sometimes the owners will lower the price and sometimes they are stubborn and thing it is worth more. Do not over pay for a house. If you have to sell down the road because of some misfortune than you will not recover on the gap. So say the house is selling for 200 000 and the bank says it is worth 150.000, well then you will only get approved for the 150.000. If you lose your job and have to sell than you may not recover that 50.000 you put into the house already. The bank gets paid back first, and you will be out the 50.000 plus any other cost and fees to sell the house and interest on the loan.
So stick to your guns and only purchase a house for what the appraiser approved its value for and do your homework and research the area yourself on line and find out what houses are be bought for around the area.
Also be prepared to pay for inspections and appraises, and termite inspections and titles and a whole hosts of things at closing or some even before. So far I had to pre-paid only the inspection this time around. The bank will sometimes pay for the appraiser, and some may be paid for by the seller if you have a contract agreement where they will pay some or all the closing costs.
Good luck the road is long. I am still on it and waiting to here what the appraiser says. We are hoping it is good news.
Do not take anything for granted. Ask questions through out the process. The rules change daily, so you need to keep in constant communication with your lender/agent.
I would ask them to go a step further and pre-approve you. They are slightly different, in my experience. Pre-approved just means they think you will qualify, based on the info you’ve given. When they actually go to pull your credit report, though, they could find something you don’t even know is there, which could ruin your chances. Best to find out if there are any nasty surprises early on. I echo what others have said, too… don’t buy a house that costs as much as they qualify/approve you for. Figure out what you can afford to spend monthly on a house payment, and work backwards from there.
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