What’s a Pre-qualification?
We recently interviewed Kacie Hillis, loan officer with AgChoice Farm Credit. As the fourth podcast in the series The Country Life: Buying Land, Kacie answered many common questions about getting pre-qualified including the benefits and what’s part of a pre-qualification. Listen to the full podcast episode with Kacie here.
Let’s get started with the basics. What is a pre-qualification and when should a person get pre-qualified?
A prequalification is a preliminary approval for a loan. However, it is not a full loan approval or commitment from the lending institution. Pre-qualifications are generally valid for 60 days.
Most customers like to get pre-qualified when they’re shopping around for land. That way, when they are searching for the perfect property they already know what they can afford. I always recommend getting pre-qualified because there are many things related to your income and credit that are considered and it is beneficial for your potential lender to know that up front. It will help you as the buyer – even if we cannot do the financing now, we can help you know where to improve so we can hopefully help you in the future.
Are there any other benefits to getting pre-qualified?
Yes, getting pre-qualified should make the loan process and buying process a little quicker. Most realtors request a pre-qualification letter when a buyer submits an offer on a property, so you would already have that ready.
From a lender’s perspective, we have already pulled your credit and done some preliminary leg work with a pre-qualification. When you come back ready for the final loan, all we have to do is verify the information provided and ensure that the property you have made an offer on is eligible for financing. From there, we get the appraisal, the attorney processes the title search and then we can proceed to closing. The faster we get all the needed documents, the faster we can move the loan through the process.
It's important to note that there are not any fees associated with getting pre-qualified, so it never hurts to take this first step. A fee may be charged later in the loan process once a full application is received and processed.
What items does a person need to provide for a pre-qualification?
It’s a very simple and easy process when completing a pre-qualification. A few of the things we’ll ask you to provide during pre-qualification include:
- General information – name, address, birthdate, social security number, etc.
- Income verification – balance sheet, W-2 or paystub
Keep in mind that the pre-qualification is based on limited information and every case is different. Therefore, you may also have to provide other verification items based on your specific situation.
Is there anything else you’d like to share with our listeners today?
If you are considering a land purchase in the near future, reach out to a lender to get pre-qualified. Pre-qualification offers lots of advantages in the buying and loan process, plus it helps you focus on properties that are in your price range.
I am one of several loan officers who specializes in home and land loans for AgChoice. If you live or are looking for property in central, western or northern Pennsylvania, contact AgChoice about how we can help you get pre-qualified.