WHAT IS THE DIFFERENCE?!
If you’re thinking of buying a home, you will come across many confusing terms. For today, let’s tackle “pre-qualified” and “pre-approval”.
Pre-Qualified – A loan officer has taken some information from the borrower, and made a tentative; simply denotes a process that has not yet been underwritten to the guidelines of a particular lending institution (wikipedia.com)
Whew…what a moutful!! Here is the breakdown: 1) you want a house, 2) you call, text or e-mail your income, social security number & job history to a mortgage officer, 3) the mortgage officer runs your credit and debt to income ratio, 4) the mortgage officer gives you a certain amount that you “could” qualify for
Pre-Approval – Buyers can then get a letter of pre approval from the lender, and when shopping for a home can have possibly an advantage over others because they can show the seller that they are more likely to be able to buy the house (wikipedia.com)
That’s easier… Here’s the breakdown: 1) you want a house, 2) you sit down with a mortgage officer and complete an application, hand them your W-2’s, social security number & job history, 3) the mortgage officer sends your paperwork to underwriting (detailed prcoess used to asses your eligibility for a loan), 4) the mortgage officer gives you a pre-approval letter
Why is a pre-approval better than pre-qualified? Simply put, it gives you an advantage over your competitors (other Buyers) 😀 Why? It allows you to find the home of your dreams, and to make an offer that is not contingenc upon financing (you’re already pre-approved!!) vs another Buyer who is pre-qualified, or worse yet, hasn’t even spoken to a mortgage officer!! :gasp: