Pre-Approval Vs. Pre-Qualification:

Know the difference

You should know about Pre-Approval and Pre-Qualification as well as the differences. Someone who is pre-approved and another have been pre-qualified for loans. So is there any one better than the other? If yes, then know how.

Let’s you are a homebuyer but don’t have enough money to buy a home for cash. If you are an employee or have earning source then you can manage to borrow money from the lenders in buying a home. This time you have to check your range of earning and paying capacity so that you can receive credit accordingly. Here pre-qualification come into consideration as before booking houses you can check you mortgage power and consider which loan program might be best for you.

The difference is here:

“Pre-qualification” is an essential part of estimation before borrowing loan or mortgage. It is also called as borrowing power. Your pre-qualification for a loan or mortgage is depends on the income & debt levels and it decides what amount you are eligible to borrow from a lender. You just tell your pre-qualification report to your lender it will become easy and can shorten the loan approval procedure. Your lender may also ask for a credit report.

“Pre-approval” is a formal process and more simple than pre-qualification. In this case you will be sitting with your lender and provide him your last 2 years income tax returns, bank statements, W2’s, etc for verification and get pre-approved. The lender may enquiry about your present employment and credit reports to give a complete shape of your pre-approval.

A pre-approval plays a vital role obtaining a mortgage than a pre-qualification. It recognize you a strong buyer than the pre-qualification buyer. This is a process by which you can not only make better deal but also feel comfortable with understanding the process easily.

Although pre-approval gives better result than pre-qualification, yet neither a "pre-approval" nor a "pre-qualification" are seen as absolute loan commitments. You have go through the existing process of property appraisal, information verification, credit rechecking, etc before receiving a loan.

Above all pre-approval and pre-qualification has a great role in loan applying. By discussing with a lender on the varied issues you can get information how much you can afford. What type of homes is in your price range?

At ABC of Realty, we can provide free consultation as well as information. If you have any query please feel free to contact us.