Which one are you? AND Which one carries the most weight? But more importantly do you know the difference?
Being Prequalified is an estimate of what the lender thinks you can afford based on the information you have given them over the phone. Like how much you make and what your current debts are and sometimes includes pulling your credit report.
Preapproval actually requires that you submit a loan application with the necessary documentation, wihich include:
- Tax Returns
- Bank Statements
- Pay Statements
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and a few more verifications that you "neglected" to mention initally. For Example:
- The loan you co-signed for, for your daughter but she makes the payments on.
- Yes that student loan too
- Oh, yes that child support payment
- And that hospital bill that's in collections
The preapproval letter assures you, your agent, prospective sellers and their agents, that you can obtain a mortgage. Without it, they may not want to consider your offer. Today, most will want to have something from the lender, before they review most offers.
Talk to your favorite agent, who can help you with this process. The best feeling is going out to view houses and knowing you can afford every beautiful home your agent is about to show you.
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