One of the first conversations we typically have with buyers is advising them to get a home loan preapproval or home loan prequalification letter. One of the key questions is what is the difference between getting a pre-qualification letter and a pre-approval letter.
First, you want to get prequalified or preapproved with a trusted home lender.
What’s the difference between these two things? Plenty…and by understanding the difference up front you may avoid major problems down the road.
Home Loan Preapproval vs. Home Loan Prequalifcation
Cunningham Mortgage has created a great video that explains the difference very well.
You can get “Prequalified” for a home loan based on information you provide verbally to your Loan Officer. Sometimes, the lender will obtain a credit report. If you are “prequalified,” the lender will give you a document that states an approximate dollar amount you might expect to borrow.
The next step in the lending process is to apply for a home loan preapproval, where you will provide the lender with credit detail and other documents that verify your income and assets.
When you are preapproved, the lender has committed to an exact dollar amount they are willing to loan to you.
To a home seller, an offer presented from a preapproved buyer is much stronger than from one who is prequalified.
It is advantageous to complete one or both of these steps – pre-qualification and pre-approval – before you start to look for a home. That way, is that know how much you can borrow and you won’t waste time on homes that outside of your budget.
See a related article on rehab loans.
And, don’t forget. You can count on your expert loan officer to help you through the process.
This information has been provided to Real Estate Experts by one of our lender partners, Teresa Parker, with Cunningham Mortgage. Teresa’s contact information is below.
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Teresa M. Parker
Email [email protected]
NMLS # 453354
Company NMLS # 2024