Getting a Mortgage: Pre-Qualification is Not the Same as Pre-Approval

Posted on Nov 27 2017 - 1:00am by Admin

Mortgage loan agreement application with house shaped keyringDoing your homework or being prepared is one important factor in qualifying for a mortgage. It is important to remember, however, that pre-qualification is different from pre-approval. Getting pre-qualified does not necessarily mean that you can get the mortgage to finance a new purchase.

Migonline.com and other mortgage lenders in Cookeville discuss the differences between pre-qualification and pre-approval:

Pre-Qualification

This is the first step in getting a home loan. This involves giving the lender a general view of your finances, which includes your income, debt, and assets. Using this information, they can give you an idea of the loan amount may borrow. This usually doesn’t involve any fee and can be discussed online or thru phone.

Getting pre-qualified does not include an evaluation of your credit history or your financial readiness and ability to pay for a house. This is why it’s not a guarantee that you can get a mortgage. At pre-qualification, your lender can explain different types of mortgage or suggest which ones fit you well financially.

Pre-Approval

This follows pre-qualification and is usually more thorough. This requires filling out an application form and giving the lender the necessary documents. The lender or the mortgage company will need to take an in-depth look at your finances and credit history to determine if you’re ready to take on a mortgage. At this point, your lender can tell you the amount you are approved of.

Getting pre-approved can give you leverage when buying a home. As you know the exact loan amount you can borrow, you can also shop for a home below that amount and save more. A pre-approval can also let you know about the interest on the mortgage. This also means that you are on your way to getting an actual home loan.

Getting a pre-approval can make you make an attractive buyer to a potential seller. This is why you should get pre-qualified and pre-approved before looking for a home. This will determine how much you can afford. This also means that you are serious about buying the house.