Qualifying for approval

BY DEBRA GELBART

Prequali cation provides basic information to you and a property seller about your nancial readiness to buy a home. Preapproval signals that a lender is on the cusp of granting you a mortgage.

Prequalification

For prequali cation, “most lenders require an application, credit report and documentation on income and assets,” said René Lopo, builder sales manager and renovation and reverse mortgage specialist for loanDepot in Scottsdale. By having this information, Lopo added, a loan o cer can direct the client to an appropriate type of loan and identify a price-range the buyer can likely a ord.

Prequali cation is su cient if a client doesn’t intend to place an o er right away, Lopo said, but is simply looking at what the market has to o er.

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Preapproval

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Prequalifying doesn’t mean the loan approval process has begun, said Kiesha McFadden, vice president of sales and marketing and a senior loan o cer with Tolis Mortgage Financial Group, a mortgage broker in Fountain Hills. If a client wishes to proceed to preapproval, the loan o cer will require

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paystubs, W-2s, tax returns, bank statements and other documentation, McFadden said. A er all documentation is collected, a lender will submit the le and supporting documentation for a “conditional” approval, Lopo explained.

Preapproval means assets and income have been veri ed and meet Fannie Mae and Freddie Mac guidelines, McFadden said, “and are ready to be submitted to the lender, once the client is under contract.”

Advantage — preapproval

A preapproval reassures the seller (whether an individual in a resale situation or a builder in a new-home scenario) that the buyer has the ability to buy the home and close in a timely manner, Lopo said. In addition, she said that preapproval really speeds up the process — depending on the documentation and how long it takes to get an appraisal of value for the home, the loan approval process could be a week or less. Without preapproval, loan approval may take 30 days or so a er an o er to purchase has been accepted by a seller.

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