PreQualification Or PreApproval

PreQualification Or PreApproval

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Pre-qualification vs Pre-approval: What’s the Difference?


In a nutshell, the difference between being “pre-approved” and “pre-qualified” is as follows:


” Mortgage pre-qualification” is basically a determination about whether or not the prospective applicant will most likely qualify for a loan within the lender’s current programs and standards. It is also a determination about the likely amount of the loan for which the prospective applicant will qualify.

“ Mortgage pre-approval” is a much more formal process. With pre-approval, you’ll have actually completed an application with the lender, supplied them with income data, your W2’s, bank statements, etc. The lender has gathered information about your employment and will also run your credit report; the lender will have run the application through an automated underwriting process. A pre-approval is a far more complete and comprehensive process than what is utilized for pre-qualification status.


The Mortgage Pre-Approval Advantage:  A pre-approval means that you are far closer to receiving a mortgage loan commitment from a lender than with just a pre-qualification. A pre-approval can help buyers to take some of the guesswork out of the home buying process. In the eyes of any seller, you are considered a “stronger buyer” with pre-approval status than with just a pre-qualification letter.

Pre-approval is very helpful as a bargaining tool in negotiating a better deal with a seller. Overall, having a pre-approval can make you feel more comfortable with the home buying process and have more of a leg to stand on when negotiating with sellers. It should be duly noted that any good Real Estate agent is going to require a buyer to have a pre-approval letter and NOT just a pre-qualification when they are representing a seller.

It should be noted that neither a “pre-qualification letter” nor “pre-approval” are viewed as absolute, iron-clad loan commitments from lenders. A lender will still have to look closer to assess property appraisals, verify the information collected, assess the property’s condition & eligibility for the type of financing being sought & always, re-check the applicant’s credit report & employment status again before closing.  Having a pre-approval in hand however, is about as close as you can get to knowing you will get financing.  

Want to be the strongest buyer in the room - listen to your Realtor & get yourself Pre-Approved, then you might not have to have the highest offer in the room!


Tracy Boulanger Headshot
Author:
Phone: 936-718-8766
Dated: February 27th 2016
Views: 628
About Tracy: Welcome to my website. As an efficiency driven Realtor, my goal is to earn your business and future ...

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Mariner Realty
13185 FM 1097, Ste E
Willis, TX
936-225-5855
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