Boy is there a world of difference, so don’t be under the assumption that if you are pre-qualified you are pre-approved for your home loan. There is a world of difference and we are here to break it down for you.
To be pre-qualified means you have taken the first steps in the mortgage process. You have spoken to a lender and provided them with an overview of your financial situation, i.e., debt to income ratio, assets, etc. Your lender then gives you a quick recommendation of the type of mortgage you may need as well as how much you may qualify for. Pre-qualification is not a sure thing.
Pre-approval is the next step after pre-qualification. This is a much more in depth process. At this stage, lenders will require you to provide financial documents such as tax returns and pay stubs. A credit report will also need to be run and you will fill out an official mortgage application. This is also the point where fees will come into play.
Obviously, pre-approval will give the buyer a better look at exactly what they can afford and how much of a loan they will qualify for. Pre-approval can also provide the upper hand when it comes to price negotiation of a property because the seller knows they have a serious and qualified buyer.
As always, I highly recommend partnering with someone during the loan process that will guide you in the right direction and help you to avoid costly mistakes that could keep you out of that new home.
If you would like to read more on the difference between pre-qualification and pre-approval, click this link https://mortgagegumbo.com/pre-qualify-vs-pre-approval/ and head over to our website. Or you can call me, Dwayne Stein, anytime at 504-207-7600 or at [email protected].