Are pre-approvals and pre-qualifications the same thing? If you are pre-approved are you guaranteed to close your mortgage loan? Do all mortgage loans require a 20 percent down payment? In today’s blog post, we hope to debunk a mortgage myth or three and help you better understand the mortgage process.
Mortgage Myth No. 1
Pre-qualification and pre-approvals are the same thing. FALSE.
Pre-qualifications will give you an idea of what kind of loan you may qualify for and can typically be completed in minutes. This informal estimate may be just fine for those in the very early stages of the home buying process.
Pre-approvals are more involved and are a better indication of your ability to fully qualify for a mortgage loan. In order to get pre-approved, we will gather all the information we need to begin the loan process. This typically involves a credit check as well as income and asset verification. Read more about the pre-approval process in House Hunting? You Need a Pre-Approval Letter.
Mortgage Myth No. 2
You need a 20-percent down payment. FALSE.
There are a lot of options out there for home buyers, including Federal Housing Administration (FHA) loans that allow borrowers to put as low as 3.5-percent down. USDA loans and VA loans typically don’t require a down payment, but do have certain eligibility requirements.
While a lower down payment may help borrowers get into a new home sooner, mortgage insurance is typically required. Read more about mortgage insurance premiums (MIP) and private mortgage insurance (PMI) in What is Private Mortgage Insurance or PMI?
Mortgage Myth No. 3
Your mortgage pre-approval means that your mortgage is guaranteed. FALSE.
Too many borrowers make the mistake of making large purchases or applying for new credit while in the middle of the mortgage process.
If you have applied for a mortgage loan or intend to apply for a mortgage, do not under any circumstances apply for new credit. This means no new credit cards, credit card consolidations or auto financing. If you open a new account during the mortgage process, it will need to be verified by your lender. While you may think that your lender won’t know, lenders do a credit check prior to closing to ensure your account status hasn’t changed. Anything that changes will require additional verification. Your credit score could change because of your new financial situation, which could cause delays in your settlement or changes to your interest rate.
Read Mortgage Do’s & Don’ts to learn about ensuring a smooth loan process.
Contact Us or Apply Online
All of our loan officers are qualified to discuss your personal finances and recommend the best mortgage loan program for your specific needs. Find a loan officer near you using our branch locator, or apply online and we will forward your application to a qualified mortgage professional in your area.
About Inlanta Mortgage
Celebrating its 20th Anniversary, Inlanta Mortgage is a growing mortgage banking firm committed to quality mortgage lending, ethical operations and strong customer service.
Inlanta Mortgage offers Fannie Mae/Freddie Mac agency products, as well as a full suite of jumbo and portfolio programs. The company is an agency approved lender for Fannie Mae, FHA/VA, FHA 203K and USDA. Inlanta Mortgage also offers numerous state bond agency programs. Review Inlanta’s mortgage loan programs here.
Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin. NMLS #1016. Inlanta Mortgage has been named to the Scotsman Guide Top Mortgage Lenders 2012 list, Mortgage Technology’s Top Tech Savvy Lender List, is a Top 100 Mortgage Banking Companies in America in 2012 and among the Fastest Growing Milwaukee-Area Firms.