A mortgage is money a buyer borrows from a lender to pay for property. The mortgage can be a first or second mortgage. Many people decide to become pre-approved for a mortgage, rather than find property and then try to acquire a mortgage from a lender.

What Is Mortgage Pre-approval?

Mortgage pre-approval means a lender or bank has researched the borrower’s credit history and determined that the borrower can obtain a mortgage from them. The pre-approval may only last a certain amount of time such as 90 days.
 How Time Consuming Is the Pre-approval Process?
Some borrowers consider it extremely time consuming because it requires:

  • Finding a lender
  • Completing a mortgage application
  • Provide the bank or lender with all of the necessary documents
  • Wait for the lender or bank to make the pre-approval determination

If approved, the borrower will find out how much the lender is willing to loan them.

What Is the Benefit of Obtaining a Pre-approval?

By getting pre-approval, the borrower will know just how much they can spend on a property. For example, many people first look for a property, then try to obtain a mortgage. Sometimes, they may lose out on a property because a lender is not willing to loan them money that they need to buy the home. With pre-approval, a borrower knows the price range of the homes that they can afford.

Is Pre-Qualified the Same as Being Pre-approved?

No. Being pre-qualified is different because it is only for informational purposes. A borrower who is pre-qualified is given an idea of how much money a bank may lend them. The amount is based on the borrower’s:

  • Debts,
  • Assets, and
  • Income.

However, getting pre-qualified does not mean a borrower can obtain property using the qualification letter.

What Does "Loan Origination" Mean?

"Loan origination" describes the process of a borrower applying for a mortgage loan. The borrower goes through the same process that they did for becoming pre-approved and:

  • Negotiates loan terms
  • Finalizes the loan application
  • Completes the approval process

Should I Contact an Attorney about Getting Pre-Approved?

Yes, a real estate attorney can assist you in understanding the pre-approval process. They can also help you in determining how to proceed with your quest of getting a mortgage.