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Luke Kinsey, Loan Originator with Prime Lending, Interviewed on the Colorado Real Estate Leaders Podcast

Luke Kinsey discusses the difference between pre-qualified vs. pre-approved and adjustable rate loans.

Listen to the interview on the Business Innovators Radio Network:

Pre-qualification is the first step in applying for a mortgage loan. During this stage, lenders will review financial information to understand a buyer’s borrowing power. They’ll also estimate what interest rate someone could qualify for. This estimate is based on credit score, income, debts, and employment history.

Pre-approval is the second step in applying for a mortgage loan. Once a person has been pre-qualified, they can apply for pre-approval. During this stage, lenders will verify financial information and issue a formal loan approval. This means that people are more likely to be approved for the loan amount they’ve pre-approved.

So, what’s the difference between being pre-qualified and pre-approved for a mortgage loan? Pre-qualification is the first step in the process and gives an idea of borrowing power. Pre-approval is the second step and ensures that someone is more likely to be approved for the loan amount they’ve been pre-approved for. When ready to start shopping for a new home, getting pre-approved for a mortgage loan is vital to know exactly how much someone can afford to spend.


Luke also discussed adjustable rate loans and shared: “An adjustable rate loan is a loan where the interest rate can change over time. The most common type of adjustable rate loan is a mortgage, but it can also be used for other types of loans like personal loans and business loans. With an adjustable rate loan, the interest rate is usually fixed for a certain period of time, typically 5, 7, or 10 years. After that, the interest rate will be adjusted based on changes in a market index, such as the prime rate. The interest rate on a loan will go up or down depending on how the market index moves. If the index goes up, so will the interest rate (and monthly payments). If the index goes down, the interest rate (and monthly payments) will go down as well.”

Benefits of an adjustable-rate loan

The most significant benefit of an adjustable-rate loan is that people may get a lower interest rate than they would with a fixed-rate loan. This can save money on monthly payments and help repay the loan faster.

Adjustable rate loans can also be a good option if someone expects their income to increase in the future. With a fixed-rate loan, monthly payments will stay the same even if the income goes up. With an adjustable-rate loan, the monthly payments will increase along with the income, making it easier to keep up with payments.

Risks of an adjustable-rate loan

The most considerable risk of an adjustable-rate loan is that the interest rate could go up sharply after the initial fixed-period ends. If this happens, the monthly payments could become unaffordable. People could also end up owing more money than they originally borrowed if the interest rate goes up and they don’t sell or refinance their home.

Another risk is that the index used to adjust the interest rate could become volatile. This could cause the interest rate (and monthly payments) to go up or down erratically, making it difficult to budget for people’s loan payments.



About Luke Kinsey

The way he brings value to the Colorado RE market is by being more than just a loan originator. He sees himself as a home loan expert/educator who wants to help buyers make the best decision to meet their financial goals and homeownership goals and strive to create a relationship for life aside from just getting the one-time transaction.

When working with him, not only will he show buyers the mortgage program with the lowest interest rate, but he also provides them with options that will give them the lowest monthly mortgage payment, lowest closing costs, and lowest overall cost of homeownership. That way they have the full picture and can make an educated decision on what will best benefit them in the long run.

Learn more:




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