There is a difference between Mortgage Pre-Qualification and Mortgage Pre-Approval. As a potential homebuyer it is important for you to understand the difference and know which one fits your specific need.
Pre-Qualification: A mortgage Pre-Qualification is an informal snapshot of your creditworthiness and how much you may be able to borrow. It’s simple process you can do over the phone or on-line. You’ll answer a few questions about your income, your long-term debts, your down payment and closing costs ability, etc. – Just to get a general idea of how much you can to spend on a new home. Pre-Qualifications not binding. There’s no guarantee that you will, in fact, get a loan for that amount.
Pre-Approval: A mortgage Pre-Approval is a formal commitment from your lender that they will lend you a specified amount of money, subject to an appraisal of the home you decide to buy.
To become Pre-Approved, you’ll need to provide documentation of your creditworthiness and ability to pay. A Mortgage Underwriter will review and verify your documentation to determine how much the lender thinks you can afford to borrow and issue to you a formal Mortgage Commitment Letter. A Mortgage Loan Officer cannot issue you a formal Commitment letter.
By getting Pre-Approved for a mortgage before you start house hunting, you will be able to shop with confidence and show sellers you are qualified and serious about buying their home.
Applying for mortgage Pre-Qualification, or even better, Mortgage Pre-Approval are important first steps in the home buying/home financing process. However, know there is a difference between the two. As a potential homebuyer it is important for you to understand the difference and know which one fits your specific need.
Reach out to Me to discuss the right mortgage option for your family and to take advantage of my FREE Jump Start Mortgage Pre-Approval Service