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If you’ve ever shopped for a home you have likely heard the term prequalification or preapproval. This is an endorsement provided by a lender to show that you have a strong enough financial profile to be able to buy the home you made an offer on. It’s basically a letter stating that the lender is willing to lend to you.

Some lenders offer a prequalification and some a preapproval. There is negligible difference between the two and both mean you are qualified to buy based on what has been reviewed by the lender.  The major difference you need to pay attention to is what information is being reviewed in order to give you the prequalification or preapproval. 

According to Consumer Financial Protection Bureau (CFPB) it’s important to understand how a lender does the prequalification and preapproval.

Some lenders base preapproval letters solely on the information you provide. Other lenders dig into the details with you now to make certain you have all the documentation you need and prevent delays and surprises later.

Today there are even apps available where you can enter some basic information yourself and the system will spit out a preapproval for a certain loan amount. These tools use a handful of data points to determine electronically that you have what is necessary to purchase the home. The risk of these systems is that they jeopardize the legitimacy of your qualification and leave room for surprises in the loan process. For example, if you were rushing through the application and accidentally entered a zero on the end of your monthly or annual income, you’re now being “pre-approved” based on 10x the income you actually make… Not a recipe for success! 

As a homebuyer it is imperative that you understand that when a lender takes minimal information from you verbally, or even worse, just over the computer, they don’t have the full picture to confidently provide their prequalifcation or preapproval. 

A Legacy Mortgage Prequalification

When you receive a prequalifcation letter from Legacy Mortgage you can feel confident that it’s something you can count on. We will review your pay stubs, credit report, w2’s and tax returns if you’re self employed or own investment properties. We’ll run the same income calculations that our underwriters will use to calculate your income to maximize the accuracy of your financial profile. We’ll ask the big questions, about your employment history, your future employment, your plans and goals for your home purchase, and more. If you have a unique financial background, maybe a situation that doesn’t fit the standard box that most lenders try to fit you into, we get our underwriting team on the phone and get hard and fast answers on what we can do to get lender approval, straight from the source.  This deeper dive is what allows us to confidently position you as a qualified buyer. You will have to share these documents anyway during the loan process so why not use them to put yourself in a competitive light when you make your offer. 

The current real estate market is highly competitive and a pre qualification that the seller recognizes from a reputable local mortgage broker will help you stand out.

If you rely on a prequalification or preapproval with limited data you put yourself at risk of not being able to secure the loan you need to buy the home.  

Working with a Legacy Mortgage loan officer gives you a strong partner in your home mortgage journey. We will evaluate your income, review your debts and not only determine if you can afford the house you’re looking at but also give you realistic expectations for how much over asking you can feel comfortable offering. The  real estate market today is so challenging for buyers, it can be hard to keep a level head. Let us help protect you during this process and set you up for a successful home purchase. 

If you are looking to buy a home in the current Upper Valley real estate market, you need a team of local real estate experts on your side. We have the privilege of partnering with the best local agents, appraisers and attorney’s the Upper Valley has to offer. When you work with Legacy Mortgage you are working with the best local professionals from beginning to end. Reach out to the Legacy Mortgage team to get started get the loan process started. Call us today, 603-643-7400.