Pre-Approval vs. Pre-Qualify
I often have clients ask me the difference between to pre-approval and pre-qualify. They almost sound the same, right? But in truth, they are very different.
Pre-approval and pre-qualification are two different things. During the prequalification process, a loan officer asks you a few questions, then hands you a "pre-qualification" letter. The pre-approval process is much more thorough. During the pre-approval process, the mortgage company or mortgage broker does virtually all the work associated with obtaining full-approval. Once you find the property to purchase the only a few things left to get full-approval for the loan (appraisal, title search and possibly some re-verification of bank statements, etc.
Pre-Approval Gives Buyer More Buying Power
When you're pre-approved you have much more negotiating power with the seller. The seller knows you can close the transaction because a lender has carefully reviewed your income, assets, credit and other relevant information. In some cases the seller may have multiple offers in on their property at one time. A buyer being pre-approved can make the difference between buying and not buying the home. Also, you can save money as a result of being in a better negotiating situation. Many mortgage companies will help you become pre-approved at little or no cost. They'll usually need to check your credit and verify your income and debt and assets. When submitting your offer always make sure the pre-approval letter is attached to your offer.
More Buyer Tips
Looking to purchase a home? We have more buyer tips that will help you all the way through the transaction.
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