The Difference Between Pre-Qualification and Pre-Approval for Saratoga, NY Home Buyers
It is Important to Know the Difference!
Mortgage brokers will often tell potential home buyers how important it is to have all their paperwork in before they start looking for a new home. This is done to help home buyers understand how much they can afford and to expedite the buying process once they find their ideal home. The terms pre-qualification and pre-approvaltend to be used interchangeably by home buyers, however they mean two completely different things. Some lenders offer both pre-qualification and pre-approval loans to home buyers and here is the difference:
Pre-qualification is an informal way to find out approximately how much a home buyer you be able to borrow. Pre-qualification has no obligation as it is a conversation, during which a home buyer indicates how much they owe and have in assets. With the information obtained the lender with give a home buyer a ball park figure of a mortgage amount the buyer would likely qualify for.
Pre-approval on the other hand is a more formal commitment by a lender. In other words an actual assurance to lend a home buyer a certain amount. For pre-approval one would complete an official mortgage application and provide present evidence of their financial status. When a lender analyzes this information along with a thorough background check and credit rankings, the lender will provide a conditional approval.
|
Pre-Qualification = Good |
Pre-Approval = Best |
|
• Pre-qualification provides a snapshot of home buyers power • Pre-qualification is an informal and easy to obtain process • Pre-qualification is unverified financial information • Pre-qualification is generally not taken serious by sellers or real estate agents • Does not indicate commitment by the lender to complete the loan |
• Pre-approval provides a detailed overview for home buyers • Pre-approval is a formal process, harder for home buyers to obtain • Pre-approval is taken more seriously by sellers and real estate agents • Indicates the lender is willing to complete the loan. |
-
If you would like to get more information on getting pre-approved visit Kurt Endres from Prospect Lending.
Contact a Saratoga NY Real Estate Agent.
Comments(1)