Navigating the world of mortgages can be challenging! The difference between Pre-Qualified and Pre-Approval can be the vital step in wasting valuable days during the conditions process and help eliminate un-necessary stress to an incredible home purchase experience!
- Both can help estimate the loan amount that you will likely qualify for. This may save time by starting your home search by looking only at options that you know would will fit the budget. Preventing possible frustration of finding out the house you want is out of your budget.
- Seller’s may take a more serious consideration if you’ve been pre-approved/qualified. A pre-approval letter or a pre-qualification letter can help demonstrate that you have a good chance of being approved for a mortgage for the amount that you’ve offered on the home.
- A pre-approval letter or pre-qualification letter may help your offer stand out in a competing, multiple offer situation.
- Neither pre-approval nor pre-qualification is a guarantee that you’ll receive a loan from the lender and you’re not obligated to get a mortgage form the lender who pre-approved or pre-qualified you.
- Lenders may use the terms “pre-qualification” and “pre-approval” interchangeably. Different lenders might have different definitions for each so please confirm carefully.
- Pre-qualification is often seen as the first step in the mortgage process, and pre-approval is the next step. With pre-qualification, you’ll have to provide an overview of your financial history to the lender, including income, assets, debts, and credit score. Lender will review this information to give you an estimate of what you would qualify for.
- Mortgage pre-qualification doesn’t always require documentation of your financial history; it can often be self-reported. Mortgage pre-approval is very similar, but it requires documentation and verification of your income, assets, and debts. It often includes a credit check, which will result in an inquiry on your credit report.
It really depends on how your lender defines the service and if you’re ok with a credit check or not! Be sure to ask your lender exactly how he or she defines “pre-approval” or “pre-qualification”. A Pre-Approval provides a greater in-depth analysis of your current credit situation and a better snapshot of your affordability. During the conditional stage after offer acceptance, a general pre-qualification may cause delay if your lender require additional forms to complete your credit check. Obtaining these required documents in advance to making an offer in a Pre-Approval makes the process smooth and fast when time is of the essence to get your due diligence done.