Pre-Approval Vs. Pre-Qualification When Buying Your Chicago Home
photo credit: Violette79
Are you aware of the differences between loan pre-qualification and loan pre-approval processes in Chicago?
Pre-qualification is a general number that establishes your buying power – it estimates how much you are able to pay for your new home and is a general guideline.
Pre-approval is a process where your credit and finances are examined in detail by a lender. Based upon your credit history, existing debt, income verification, and other factors, pre-approval establishes an actual loan amount and limit, including detailing your prospective monthly payment.
Pre-qualification helps pre-approval move more quickly and can keep you from missing out on your new Chicago home.
To estimate these amounts yourself, you need to determine your total income, including bonuses, tips, and interest. Then add up your monthly debt obligations. This includes everything, even child support.
Subtract the monthly debt from the monthly income and the amount left over so that you have an idea of how much you have left over each month. About 25-30% of your gross income should be spent on your new mortgage. These estimates can assist you in starting the process of knowing your price range, but conferring with a lender will give you a more solid estimate and start you in the pre-qualification process.
