You’re going to hear both the terms PreQualification and PreApproval, but they don’t mean the same thing! Before the home search begins with your real estate agent, a pre-approval mortgage letter is vital. The pre-approval means the mortgage lender has looked into your credit report as well as verify your income, bank statements, tax returns. The mortgage pre-approval letter indicates that chances for getting a mortgage approved are very high as long as your situation doesn’t change. But a Pre-Approval is not the same as a Pre-Qualification. Read below to see the differences:
Going through a mortgage Pre-Qualification is not very strenuous. The loan officer won’t check any documents from you and will base the pre-qualification off what you tell them verbally. The loan officer typically won’t check your credit either. Overall, a Pre-Qualification letter does not really mean much as everything could change. You are going to want a full Pre-Approval to make sure that you are qualified and that you understand and know all of the numbers before you begin the process.
As the name implies, it lets everyone (yourself, your agent, the sellers, and the seller’s agent) knows how serious you are as far as buying a home is concerned. While a prequalification is merely a conversation between the loan officer and a loan officer, a mortgage approval is very in-depth. The loan officer will review your credit report, as well as all of your financial documents. Some files are sent to a manual underwriter to review your file. This is all done to make sure that you are secure with your mortgage financing to make sure that nothing falls through during your home buying process.
We would love to help you through the home buying process! Reach out to get started!