Being Pre-approved for a home loan…what does it really mean?

You have decided you want to start looking for a house, so you call up your friendly CREFCO Loan Officer, give them lots of information and voila! – you get a nice letter that says you are pre-approved for a mortgage (up to a certain amount). Now what?

 

While getting pre-approved for USDA Loans can be very exciting, there is still a long way to go in the process. This does not mean that you can just go out, pick out a house and move in within 30 days. Don’t be discouraged, though, because there are knowledgeable mortgage professionals to help you every step of the way.

A pre-approval is essentially a mortgage company giving you a guideline of what how much you should be spending on your new home and that you will most likely get approved once the loan is actually submitted.  It is not a guarantee, and sometimes even the most qualified borrower will run into unexpected hurdles that will be difficult to overcome.

Once you get your pre-approval, you are sent out to purchase a home. If you do not already have a Realtor, be sure to ask your trusted CREFCO Loan Officer, since they have a list of reputable agents in almost every county in the country! You can find tips on purchasing a home HERE (You can link to the other articles or just delete this entire sentence). You find a home you love, and hopefully get an accepted purchase contract. Then the really important part begins.

Your loan will now be submitted to underwriting, which means that your loan along with the property are going to be reviewed to make sure that you are  a qualified borrower for the exact amount that the home is worth. Around this time, there will be an appraisal done one the home. The home needs to appraise to match at least the loan amount, so sometimes the price will be adjusted to match if the house appraises at lower than what you were originally under contract for. Good for you, not so good for the seller!

If your loan is approved in underwriting, great! But we are still not finished. They will come back with a list of ‘conditions’ that they need to close the loan. There will be a variety of items here, and your Loan Auditor will now be the person to walk you through this step by step. While you will no longer be working solely with your Loan Officer, they will still be around if you have any questions. You will need to try to get all of the documents the Loan Auditor asks for, and in a timely manner. Once all of the documents are received, the loan will be ready to close. While all of this sounds very simple, it can often take weeks to get it closed, so be patient. The number one goal of everyone is to get you into your new home in the shortest amount of time possible.

If the process seems like it is taking a long time, just try to remember that the reason behind these multiple steps is to ensure that you are getting into a quality home that is also affordable for you.
Here at CREFCO, we always have your best interest in mind. 
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