One of the first steps in purchasing a home is getting either pre-approved or pre-qualified for a mortgage. Unless of course, you’re buying with all cash. š
It’s very easy to get confused between the two things. So, should you getĀ Pre-Qualified or Pre-ApprovedĀ for a mortgage loan?
Without getting into too much detail, we’ll give you just the essentials in understanding the difference, not the complete procedure for each.
Pre-Qualified
This is the simpler of the 2 processes. You contact a lender, provide a bit of financial information to them, and they tell you about how much you can afford to buy. That’s about it. It’s usually done over the phone, and your credit report is not needed at this point.
WARNING! š„ It’s NOT a promise of a loan. You are not guaranteedĀ any particular interest rate. And you are not ready to purchase a home. What you have is an idea of what you may be able to buy. It’s a starting point, and a good way to start planning.
Check out Investopedia for a more in-depthĀ explanation if you’re curious.Ā https://www.investopedia.com/articles/basics/07/prequalified-approved.asp
Pre-Approved
This one is where the rubber meets the road. Paperwork, and plenty of it. You’ll fill out a mortgage application, provide documents, bank statements, get a copy of your credit report, etc.
It takes more time and there are more questions. It’s best to start with plenty of time before you plan to start looking for a home. That way you can deal with finding the papers you thought were in that one file cabinet, get your updated investment info, and try to fix any credit issues you may have.
Getting pre-approved is what you need to do before starting a home search. The person selling your dream home will want to make sure you really are qualified to buy. Most sellers aren’t willing to accept your offer with only a pre-qualification.
Again find out more here.Ā https://www.investopedia.com/articles/basics/07/prequalified-approved.asp
Conclusion
Save yourself some heartache, heartbreak, and hair-tearing-out. Get pre-approved before shopping for homes.
Better yet, call me, Libby Guthrie atĀ 925-628-2436 and I’ll answer your questions about getting started, and if you like, I’ll connect you with the right lender for your situation.
Just so you know, before my 25 years as a real estate agent and broker, I spent 15 years in mortgage banking. I know what I’m talking about and I love to share my expertise with you and your family.
Contact me today, share this article with a friend, and please, share on your favorite social site. Thanks!
