Buying a home is no easy process. There are a lot of things to consider, from finding the right real estate agent to the right lender, and of course, the right home. Try and do all of these at the same time and the process becomes infinitely more difficult.
It’s a good idea to begin the whole process by finding a reputable lender and getting pre-approved for a loan. Of course, we’ll be referring specifically to physician home loans here, but the idea applies to just about any home loan.
While doing your research, you’ll likely come across two terms relating to the preliminary loan process: the pre-qualification and the pre-approval. What’s the difference? Which one is better? Do you need both? Well, I’m glad you asked.
When applying for a physician home loan, it’s important to get an estimate of what you’re likely able to borrow (your “borrowing power”). This can give you an idea of how much you can afford. With a pre-qualification, the lender will take a look at your income and expenses, employment status, and credit–all provided verbally by you.
Since there’s usually no credit check, a pre-qualification is a very early step in the home-buying process. It’ll give you an idea of what the loan will look like, how much it will cost, and what you can afford to pay. At this stage, nothing is set in stone. A pre-qualification is usually quick, is free, and can even be done online or over the phone.
If you’ve got a firm idea of the kind of loan you’re looking for and are serious about buying, a pre-approval is a very good idea. It is a far more in-depth look at your ability to secure a loan, with the lender usually requiring an application and paperwork documenting your income and expenses.
Since the lenders will definitely pull your credit score, a pre-approval is a clear message to the lender that you are a serious buyer. It will also give you a much more accurate estimate of what your monthly payments will be, as well as interest rate. All of this will make the home-buying process easier when the time comes to purchase. Still, as with the pre-qualification, nothing is set in stone and you can still choose to walk away before signing.
If this is your first home and you just need a ballpark estimate of what you can afford, taking the first step of being pre-qualified is a great first step
Once you’re ready to secure a physician home loan and move to the buying process, getting pre-approved is the way to go. It’s a great way to make the next phase of buying go as smoothly as possible. And having been in this exact situation myself, I can tell you that anything that takes some of that stress away can be invaluable.
As always, we’re here to help! If you have any questions, don’t hesitate to ask.