What is the difference between pre-qualifying and pre-approval?
A pre-qualification consists of a discussion between you and a loan officer. The loan officer will collect information regarding your income, monthly debts, credit history and assets, and based on this information calculates an estimated mortgage amount for which you qualify. The pre-qualification is not a mortgage approval, but more an estimate on what you can afford.
A pre-approval, on the other hand, is a more comprehensive approach giving an actual decision on a home loan. Typically, a credit report is ordered electronically and is received within 30-60 seconds. This is an actual credit approval, and it carries with it some considerable benefits. From this information, a loan approval is given agreeing to finance a home and the total mortgage amount available to you.
What could be more comforting than the peace of mind that goes with knowing that your mortgage is fully approved?
You will have a greatly improved negotiating position when you are pre-approved for a mortgage. Sellers are more apt to negotiate with someone who already has a mortgage approval in hand. The pre-approval letter lets the seller know they are working with a serious cash buyer. A pre-approved buyer can also close on a property more quickly---another major consideration for a motivated seller. We strongly recommend it. |
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