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Prequalification and preapproval are the first steps toward your USDA Home Loan. Through prequalification, your USDA Loans.com loan officer uses basic information to determine initial eligibility. Following prequalification, preapproval is a more thorough look at your finances, and, when complete, this step provides realtors and home sellers more confidence in your offer.
Prequalification is the very first step meant to help rural homebuyers understand if they are eligible, as well as what could potentially hold them back from receiving the loan. In this stage, you are only asked basic information, or estimates, of your financials.
Common talking points that accompany prequalification include your approximate credit rating, ballpark range of the value of the home you would like to purchase, current income, current debts and any assets that you may have.
By going through this process when obtaining your USDA Loan, you are provided with information that will help you deal with any potential roadblocks that could prevent you from obtaining a USDA Loan.
While USDA Loan prequalification is based off estimates, preapproval deals with the actual documents and exact figures. This is the reason realtors and sellers are much more interested in a preapproval letter over prequalification.
During this more thorough consideration of your finances, your loan officer will compile your credit report, current pay stubs, tax returns and W-2, employment history, evidence of stable compensation, as well as any banking or investment statements.
Once you have been preapproved for a USDA Loan, you are well on your way to becoming a homeowner; however, it is important to remember that being preapproved does not guarantee a home loan. There are usually conditions that follow preapproval, which must be met for your underwriter to approve your USDA Loan.
For more information or to determine your USDA Loan rate, contact USDA Loans.com today!
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