Hi, it’s John with Downs Capital. Prequalification, pre-approval and commitments. If you know what these are you’re probably watching to find out if there’s something I know that you don’t. If these terms are new to you, you’re here to find out what they mean. So let’s get into it.

Prequalification is a conversation about you and what you’re trying to do. And, your lenders best guess on, can you? A pre-approval is where you get into your credit report, review your income and asset statements and utilize various technologies to underwrite your loan and issue an approval letter that you’ll use to purchase your home.

A financing commitment is when the lender guarantees you funding after an underwriter has fully reviewed your documents. Okay. So what’s the most important?

Pre-approval, right? You’re thinking pre-approval. Well, you know, for me, it’s actually the prequalification. Because this is the deep dive into your goals and your desires of buying a new home, asking all kinds of questions and challenging you with new ideas, all of which leads into a discussion of your income, credit and assets, in order to uncover all your options, including many you didn’t even know you had.

This is a service industry, not a bunch of folks slinging commodity products, which is why I’m adamantly against lenders rocketing into pre-approvals too early. Pre-approval takes no thought or effort. I just don’t see how that type of approach is a service to anyone. My advice? If you’re looking for the quickest, fastest, lowest rates or if you’re simply going to the first lender who called you back, you could be disappointed.

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