What’s The Difference Between Pre-Qualification and Pre-Approval for home mortgage loans?
When you are shopping for a new home, you will need either a pre-qualification or pre-approval letter to submit an offer to purchase. Either letter assures the seller of your seriousness and ability to obtain a mortgage for the purchase. Usually, you can get these letters at no cost from a home-mortgage lender.
If you are competing with another buyer in making an offer on a home, a pre-approval letter carries more weight than a pre-qualification letter.
Just because you are pre-qualified for a mortgage doesn’t mean you will get one. But when you are pre-approved your chances for a green light from a lender are greatly increased.
Getting pre-qualified means filling out a loan application, having your credit report reviewed, and talking with a loan officer who will provide a free pre-qualification letter to go with your offer.
There’s no harm in getting pre-qualified—it’s a good gateway to buying a home. But to lock down that home, focus on getting pre-approved
Getting pre-approved means you have also submitted supporting documentation on income and assets for review by a lender. It takes a little longer and requires more work on your part. But it is worth it!
Pre-approvals are normally good for a 120-day period, so it’s important to begin your home search with Judy and the House Into Home team as soon as possible after receiving your pre-approval letter.
After you have a contract to purchase property, you should ask for an offer or quote from several lenders to do your loan. Even if you get a pre-qualifying letter from a lender, you can still ask other lenders to do a rate quote comparison! You should always compare rates.
The takeaway for homebuyers? Know the difference between being prequalified and pre approved, and focus your energy on accepting the former, but aggressively seeking the latter.
Do that and you’ve taken a huge step toward buying the home of your dreams.