If you're gearing up to search for your dream house, knowing how much you can afford is an important first step. It all starts with getting pre-qualified and then pre-approved for a home loan. As the area's premier provider of pre-qualified mortgages, First State Bank in Russellville, AR, makes the prep work easy and efficient. The locally owned financial institution shares the key differences between pre-qualification and pre-approval to help you get started.

Differences Between Pre-Qualification & Pre-Approval

Pre-Qualification

During this process, the potential borrower works with a mortgage lender to find out if they qualify for a loan. The applicant shares preliminary information on their income, outstanding debt, and existing assets. Most lenders will also want to know about any savings or investments. The entire process can either be done in person, over the phone, or through an online application.

Once the information is gathered, the pre-qualified mortgage lender can typically provide the applicant with early loan figures on how much they may qualify for. At this point, no commitment has been made on either side. Financing for a home has not been secured, and lenders will strongly encourage potential borrowers to move to pre-approval.

Pre-Approval

During the pre-approval process, lenders will want to see documented proof of everything the applicant shares during pre-qualification: salary, debt, assets, and savings. The requested documents include bank statements, W-2s, pay stubs, and a listing of expenses and loan obligations. All financials undergo a verification process to ensure the information provided is valid. Most lenders will also pull the person's credit scores and reports to review payment histories.

Based on the figures submitted, lenders can inform the applicant if they are eligible for a home loan or pre-qualified mortgage. The potential borrower is also provided with the actual loan amount they are eligible to receive. Knowing this key figure helps home shoppers search for dwellings within a certain price range. Once the pre-approval process is completed, the applicant can decide to move forward with underwriting.

Having all the necessary information before shopping for a home can provide more financial leverage. First State Bank continues to help those who are ready to start searching. Whether it's a pre-qualified mortgage or other loan options, the community bank makes all of its lending decisions in-house. To get started on the pre-qualification and pre-approval process, call (479) 498-2400 today. You can also complete the convenient pre-qualification form online at your convenience.