What is the difference between getting pre-qualified and pre-approved?
. You have requested information on
What is the difference between getting pre-qualified and pre-approved?
Pre-qualifying is a process whereby a loan officer obtains information about you, either over the telephone or face-to-face and indicates the loan amount you can qualify for and the best type of loan to meet your particular needs. The loan officer will want to know information about your income and a list of your debts. The lender through a series of calculations will be able to determine the size of a loan you qualify for based upon loans available in today’s market. This is referred to as your income to debt ratio. The term pre-qualified simply means that a mortgage or real estate representative has examined your income to debt ratios...this does not mean pre-approved. Pre-approval is a step beyond pre-qualifying. In a pre-approval we send the credit part of the loan package to the lender and get you approved for a certain type of loan with a particular lender before you have found or made an offer on a property.
Pre-approved means that a mortgage or real estate professional has examined, submitted and received acceptance on your financial capabilities of qualifying for a mortgage based upon your income to debt ratio, loan information, and credit profile. Many times borrowers are told they are pre-qualified prior to the lender examining in detail the borrowers complete financial profile. This leads to great frustration and disappointment. With a pre-approval you can close the loan faster and often will find your offer more acceptable to the seller. If you are about to begin the process of buying a home we would strongly recommend pre-approval over simply being pre-qualified. The loan professional that has made this information available to you specializes in assisting individuals in the home buying process. Your loan professionals in most cases can advice you on the best approach and help you get the home of your dreams!