Bank Notes Blog Article
Bank Notes Blog Article

Pre-Qualification is a term that means the bank has taken a preliminary look at your stated assets/income/credit to give you and your realtor a ballpark figure of what you may qualify for up to a specific amount. You are not actually approved for that much until the bank is able to look at your documentation and verify your information.

Pre-Approval means the bank has looked at and verified your documentation and is willing to say it will loan you money up to a specific amount. Getting pre-approved takes longer than pre-qualification and can occur later in the home-buying process.

"Meeting with a lender prior to shopping for a new home can be a productive first step in the home buying process," says West Banker Jeff DeVore NMLS #1141391. "By meeting with a lender and getting a pre-qualification letter, realtors or sellers will know that you have been proactive in taking the first step of the home buying process. Prior to getting pre-qualified, you will want to take three important factors into consideration."

1. DTI or Debt-to-Income

This is when all of your monthly obligations and estimated monthly mortgage payment are considered in relation to your monthly income. Monthly obligations that would be taken into consideration are only debt obligations (ie: student loans, car payments, credit card debt, etc.); utilities, cable/internet, or phone bills would not be considered in this calculation. 43% is an acceptable debt-to-income ratio.

2. Credit Score 

Having an idea of what your credit score is can be helpful in creating a pricing scenario with your lender. This will help create a more accurate scenario that will detail your monthly payment and closing costs figure. A higher credit score could lead to being offered a better rate which will in turn save you more money over the life of the loan.

3. Loan to Value and Source of Down Payment

This ratio is used by lenders to express the loan amount to the value of the asset purchased. A higher loan-to-value can negatively affect your rate and monthly payment. Conventional mortgage loan products allow you to put as little as 5% down, but having a loan-to-value of 80% or more will require Private Mortgage Insurance which can increase monthly payment. Your source of down payment can come from funds in your checking or savings account, investments, or a gift from a close eligible family member.

Pre-Qualification Letter

Once you have met with your banker and discussed these three important factors, your banker will provide you with a pre-qualification letter stating that your situation has been evaluated and the bank is likely to loan you the money to buy a house. Now you can begin your search knowing what price range is reasonable for you. 

About Jeff DeVore, NMLS #1141391

Jeff started his career at West Bank in 2012 as a full-time teller, served as a Retail Banking Specialist, then Personal Banker before moving into his role as Assistant Branch Manager. Jeff attended DMACC and Iowa State University receiving his degree in Communications & Journalism/Mass Media.

Active in the community, Jeff serves on the Planning and Zoning Commission for the City of Van Meter. He has been an instructor at Indian Hills Middle School teaching the importance of personal finance and budgeting. 

Jeff enjoys being active in the outdoors and loves camping. He also likes to play many sports including soccer, golf, running and basketball. Additionally, Jeff is quite the chef and can often be found in the kitchen. Jeff and his wife Megan have twin children, a daughter and a son.

Connect with Jeff

jdevore@westbankstrong.com | 515-222-5795 


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Posted: 2020-02-12

Categories: Mortgage Loans

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