What is the difference between Pre-Qualifying and Pre-Approval?
Pre-qualifying for a mortgage up to a certain amount is an increasingly popular practice among buyers who dont want to worry about going through the approval process after theyve found the home they want. Its a verbal exchange in which the lender tells you in advance approximately how much money the buyer is able to borrow, based upon the information you provide the lender on your debt and income. Pre-approval goes a step further than pre-qualifying. It is an actual commitment to lend, provided that, when the borrower is ready to buy, he or she still meets all the qualifying conditions that were met at the time of conditional approval. We strongly recommend it!
A pre-qualification is issued by your loan officer detailing the dollar amount for which a loan can be approved for that individual. The loan officer will supply a letter which acts as a qualification for the individual to make the purchase at a certain amount. The borrower should keep in mind that pre-qualification is not a commitment to lend the amount, merely a suggestion as to how much should be lent to the individual. Pre-approval is when the lender verifies the individual’s credit, down payment, employment history and other relevant information. The pre-approval is then passed along to an underwriter who will make the final decision on the loan application. Pre-approvals act to expedite the loan process, moving the closing along as well as allowing the individual applying for a loan to possibly negotiate a better price on the property.
Pre-qualifying for a mortgage up to a certain amount is an increasingly popular practice among buyers who don’t want to worry about going through the approval process after they’ve found the home they want. It’s a verbal exchange in which the lender tells you in advance approximately how much money the buyer is able to borrow, based upon the information you provide the lender on your debt and income. A pre-approval is the best thing to get from your lender prior to house hunting so you will have a better understanding of what you can afford. A pre-approval can also help in the negotiating process.
