Unlike credit pre-approval, pre-qualification is not necessary to purchase a home. You can avoid this process if you are certain that you have good credit history, you have made a decision, and can invest in a property.

Pre-Qualification: based on a superficial analysis of your credit history, income, and expenses, it will give you an idea of which type of mortgage loan you are eligible for. To obtain pre-qualification you must submit information about your income, properties, and debts to a financial entity or a Real Estate agency; you can obtain it faster by requesting it by phone, Internet, or personally. This process is free and does not require you to commit to the loan request. Keep in mind that when buying a home, a buyer with a letter of pre-approval has a great advantage over one with a letter of pre-qualification.

Pre-Approval: a more rigorous process in which a loan entity will closely check your credit history, employment, bank accounts, stock, mutual funds, other income, and debts. The process to obtain pre-approval lasts approximately one week and costs between $35 and $100, though some financial entities and Real Estate agencies provide the form at no cost. Pre-approval is valid for approximately one month.

Documents to Present: Most of the financial entities require a copy of your driver’s license, social security card, payment stubs, W-2 forms for the last two years, and bank statements for the last two months.

Additional Documents, if Required: A copy of your divorce order, copy of the letter/check if you were given free money to purchase your home, social security card or pension, income tax statements for the last two years, and military pension.

• You can look for homes in accordance with your loan.
• You can make an offer and guarantee that your loan request will not be denied by a financial entity.
• You can close a loan faster.

Keep in mind that if you decide to replace the loan officer who gave you your pre-approval, you will lose any money that you paid for the application and other necessary documents. Plus, you will need to start the process all over again.

As you can see, the process of buying a home requires lots of time and money. Plan ahead, get information from different places, and don’t be afraid to ask questions.