Pre-Qualification vs Pre-Approval
Last modified on 2009-06-18 10:49:11 GMT. 0 comments. Top.
by Edward Galstyan
So you received a letter in the mail that you’ve been pre-qualified or pre-approved for a loan application. Great. So what does this mean, exactly? Let’s dive right in and take a look.
The terms pre-qualify and pre-approval are typically used in real estate when someone wishes to obtain a loan for the purchase of a property. Think about these two terms in terms of sequence. First, you must be pre-qualified to then be pre-approved. With pre-qualification, your lender does a preliminary evaluation of your ability to pay for a home, providing an estimate of your mortgage amount.
To become pre-qualified for a loan, you must first submit some information to your loan officer: Income, debt level, assets, etc followed by a credit check.
Pre-approval will require you to complete the full loan application and submit all of the appropriate documentation for review by the loan officer. With pre-approval, you may shop for a home with the confidence of knowing exactly how much you can afford. By knowing exactly how much house you can afford, you will avoid wasting the time of the real estate agent, lenders and above all, save yourself time as well. Furthermore, becoming pre-approved first will give you a faster closing period for the loan, and give you better buying power as well because sellers prefer pre-approved buyers.
So get pre-approved, then start shopping for a house. If you have any application stories you wish to share, leave them below!
