When it comes to getting a home loan, we all know the drill, right? Meetings and phone calls with a loan officer, lots of waiting and piles of paper.
Getting pre-qualified before you head out to look at homes can help reduce hassles and get the home buying process started on the right path, says Travis Peace, executive director of mortgage product management at USAA. Here’s how.
What is mortgage pre-qualification and when do I apply for it?
Before you spend time looking at homes that might be beyond your budget, you can share your financial information with your lender. Based on that information, you will receive what is sometimes called a “shopping letter” that states the size of the loan you may qualify for if everything checks out.
“You should do this before you start working with a real estate agent and looking at properties,” Peace says. If you need help finding an agent, the USAA Real Estate Rewards Network can help.
What are the benefits of pre-qualification?
In addition to knowing your budget in advance, you are letting your agent know you’re a serious buyer. In fact, most agents require a pre-qualification or pre-approval letter. “With a pre-qualification letter in hand, it’s easier for your agent to negotiate a contract and make your offer stronger,” Peace says.
How is pre-qualification different from pre-approval?
A pre-approval generally means that the potential mortgage lender is validating the documentation that a borrower provides, such as tax statements and pay stubs, along with pulling a credit score. (Quick tip: if you have questions about your credit score, call the credit bureau—Experian, Equifax, or TransUnion—for help.)
A pre-qualification typically means that the potential lender does not validate the information that a borrower provides and relies on the borrower’s information to provide an estimate for the loan amount they may qualify for.
The USAA Bank pre-qualification process is slightly different. When a potential borrower starts a pre-qualification with USAA Bank, they can provide financial information such as income and assets, and USAA runs that information through an automated underwriting system and pulls the potential borrower’s credit score.
How does this benefit you as a potential buyer? It helps to give you a more accurate estimate of the loan amount for which you can potentially qualify.
However, USAA doesn’t validate the accuracy of the information that you provide to them at this point in the process. So if you’re applying for pre-qualification, keep in mind that your results will only be as good as the information you send.
How long does it take to get pre-qualified?
While pre-qualifying through a phone call with a lender may take up to 45 minutes, USAA members can have the information they need in just five minutes through the USAA website or mobile app, Peace says.
“USAA is moving toward a fully digital mortgage experience, and digital pre-qualification is the first step in helping members with that end-to-end experience,” Peace adds. “By late 2017, members will be able to submit their mortgage application completely digitally. Of course, members can also call to ask questions over the phone.”
Pre-qualification is conditional. Final approval is subject to confirmation that you continue to meet approval criteria, including criteria related to your credit history, you have sufficient income to support the additional credit, and the collateral meets our underwriting criteria.
USAA Real Estate Rewards Network is offered by USAA Residential Real Estate Services, Inc., a licensed real estate broker and subsidiary of USAA Federal Savings Bank. Program may be unavailable for employer-sponsored relocations. Not available for transactions in Iowa or outside the United States. This is not a solicitation if you are already represented by a real estate broker.
Obtaining a mortgage from USAA Federal Savings Bank is optional and not required to utilize USAA Residential Real Estate Services, Inc. The mortgage can be acquired from other sources.
Use of the term “member” or “membership” refers to membership in USAA Membership Services and does not convey any legal or ownership rights in USAA. Restrictions apply and are subject to change.
Bank products provided by USAA Federal Savings Bank, Member FDIC.