Hello everyone...

I get asked all the time to explain the difference between getting pre-qualifyed or pre-approved.  So, let me try to explain a couple of the most confused words in the mortgage vocabulary.

When you hear someone speak of getting pre-qualified, that usually means that they have spoken to a loan officer and he/she has determined the dollar value of a loan that you could be approved for based on your implied income, credit score and other miscellaneous financials.  A pre-qualification is not a commitment to lend, but an educated guestimate based on the information that you provided to your loan officer.

A pre-approval on the other hand usually involves taking a full mortgage application (1003), pulling a credit report, getting your employment history, financial information (assets) and (liabilities), monthly gross income, monthly housing expenses, etc...and entering that data into a computer program that does the automated underwriting.  If your particular loan scenario comes back as eligible, then you will be issued a pre-approval letter stating the amount of loan that you are pre-approved for.  Usually a pre-approval is subject to a few conditions that need to be addressed prior to closing.  Getting a pre-approval letter may help you negotiate a better price for the home that you are trying to purchase.  It tells the seller that you are a qualified buyer and your offer should be taken seriously.

Well, simple enough, huh?  If you have any mortgage related questions....please email me.

Thanks.