Mortgage Pre-Qualification vs. Pre-Approval – They Are Not the Same

The terms used in the initial steps of getting a loan can be confusing and misleading. Understanding the difference between a Pre-Qualification and a Pre-Approval helps determine how much house you can afford, and if you are qualified to get a loan. Here’s a breakdown of the difference between two very similar and equally important terms:
Pre-Qualification:mortgage finance
The Pre-Qualification is a less involved process than the Pre-Approval and can be done over the phone or online. Mortgage Pre-Qualification is an informal snapshot of a borrower’s creditworthiness.
It is based on verbal information provided by the borrower. As the borrower, you provide the loan officer with information about your overall financial picture including debt, income, and assets. It does not involve an analysis of your credit report or a close look at your ability to purchase a home. The pre-qualification letter allows you to explore your mortgage options with a lender and ask any initial questions.
Only a Mortgage Underwriter Can Issue a Mortgage Pre-Approval Letter.
The Pre-Approval Letter comes from the mortgage company you are working with and is essentially a commitment that you have a loan approved for a certain amount of money subject to an appraisal of the property you want to buy. This letter is supported by required documentation that you voluntarily provide including;
– Credit checkpre-approval-2
– Income/employment verification
– Analysis of your financial obligations such as   credit card balances, car loans, etc.
– Copies of W-2s, pat stubs and bank statements
– Other pertinent documentation as  required
Once you are Pre-Approved, you can move forward with looking for a home confident in knowing you have a conditional commitment for the money you need to buy a your new home.

Loan Officers can not issue a valid Mortgage Pre-Approval Letter.
A valid Mortgage Approval has been underwritten by an authorized underwriter (an underwriter is the final person that says your loan is approved). If an underwriter Pre-Approves your application upfront, issues you a valid Mortgage Pre-Approval Letter, all you have to do is find the home you want, have it inspected and appraised, and you should be able to close in less than a month. This gives you leg up on an offer from somebody who has not been pre-approved.

If you are looking to buy a new home, a Mortgage Pre-Approval Letter is the smartest way to proceed. Call Me at 860.945.9284 to discuss the right mortgage option for your family and to take advantage of my FREE Jump Start Mortgage Pre-Approval service.




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