The process of real estate underwriting is often misunderstood. The underwriter is just as vital a part to closing on your home as is the loan officer. Looking for a mortgage can be an arduous progression of mind numbing visits to banks to see about finding the best mortgage terms and interest rates.
Any good real estate agent worth anything at all will normally ask if you have an approval letter before they start showing you homes. The reason for this is that if they spend hours and hours helping you find your dream home and then you cannot secure financing, they have essentially wasted their time. Obtaining pre-approval is the fastest way to set out on your home shopping adventure.
Other than pre-approval, you might obtain what is called pre-qualification. The difference between these two terms is that if you are pre-qualified it typically means a loan officer has offered his or her opinion that the person is worthy of obtaining a loan. Most of the information can be taken verbally and perhaps a credit report will be reviewed. This is not as secure as pre-approval, which means the potential borrower has gone through the entire loan process and all of the documents have been approved.
When someone decides to buy a home there are always certain steps that cannot be avoided. One of those steps is getting pre-approved for financing because most people can’t buy a home without a loan. There are specific things you have to do in order to secure financing for your home.