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Mortgage Pre-Qualification vs. Pre-Approval

Learn the differences between being Pre-Qualified and Pre-Approved for a mortgage.




Buying a home can be an easy process especially when you know what to expect. Here we go over 2 of the steps you would go through when purchasing a home through a lender.



HOMEBUYER TIP: Always check your mortgage score before applying for a mortgage. Most lenders will pull ALL 3 Credit Reports and Scores. You can view your mortgage scores as well as all of your other credit scores using the FICO score service www.MYFICO.com



What is a mortgage Prequalification?


A Prequalification is one of the first steps in the homebuying process for most people. You would supply the lender with your overall financial picture, including debt, income, and assets. The lender will evaluate and provide the amount that you would likely be approved for. Lenders may also review your credit report and may do an in-depth look at other income.




What is a mortgage Pre-Approval?


A mortgage Pre-approval sometimes is the second step in the mortgage process although it can be the first. It is a conditional commitment to grant the mortgage. Lenders will request additional documents to verify income, debt and assets. They will also require a credit check. Once all information is verified the lender will provide a Pre-approval Letter.






HOMEBUYER TIP: If this is your first time buying a home ask your lender or mortgage broker for programs catered to First time Homebuyers. These programs sometimes offer down payment assistance as well as other incentives to help purchase your home.




Which is best for me?


A Pre-Approval is best. The Pre-Qualification is not an actual approval for the mortgage it is just a potential approval. Most sellers will not take you seriously with a Pre-Qualification. With a Pre-Approval you will receive a letter for approval from the lender and you are able to make an offer on the property you choose.



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SOURCES




https://www.cms.gov/

https://www.equifax.com/

https://www.transunion.com/

https://www.experian.com/