How is pre-qualification different from pre-approval?
A Pre-Qualification consists of a credit check and an estimation of what you can afford based on the information you tell them. The underwriter (The person who has the authority to approve your loan) usually has not seen your application at this point. This is not a commitment to lend to you, but you have passed the first test. This we do for free! A Pre-Approval is a committment to lend to you. This is based not on what your tell them, but on a review of your W2’s, paystubs, tax returns , bank statements etc. An underwriter has seen your loan application and has given the O.K. to lend you the money. Having this committment in today’s market is important. This tells the seller that he dosen’t have to worry about if you will get the loan. This could give you the edge over someone else who bids on the house you want and is not already approved. There is a $50 charge for this but this comes off your closing costs. Pre-approval makes you a strong buyer, welcomed by sellers. With most other
Any reputable real estate broker will “pre-qualify” you for a mortgage before you start house hunting. This process includes analyzing your income, assets and present debt to estimate what you may be able to afford on a house purchase. Mortgage brokers and lenders can calculate the same sort of informal estimate for you. Obtaining mortgage “pre-approval” is another thing entirely. It means that you have in hand a lender’s written commitment to put together a loan for you (subject to verification of income and employment). Pre-approval make you a stronger buyer, welcomed by sellers. With most other purchases, sellers must tie the house up on a contract while waiting to see if the would-be buyer can really obtain financing.
Any reputable real estate broker will “pre-qualify” you for a mortgage before you start house-hunting. This process includes analyzing your income, assets and present debt to estimate what you may be able to afford on a house purchase. Mortgage brokers, or a lender’s own mortgage counselor can also calculate the same sort of informal estimate for you. Obtaining mortgage “pre-approval” is another thing entirely. It means that you have in hand a lender’s written commitment to put together a loan for you (subject to verification of income and employment). Pre-approval makes you a strong buyer, welcomed by sellers. With most other purchasers, sellers must tie the house up on a contract while waiting to see if the would-be buyer can really obtain financing.
