Mortgage Pre-Qualification vs. Pre-Approval

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Pre-Qualification vs. Pre-Approval

One sure way to reduce stress during the process of home buying is to seek pre-approval.

Buyers who are pre-approved are taken more seriously than their pre-qualified counterparts.  Sellers feel more confident if the Buyers are pre-approved 

Pre-qualification is not a loan commitment from a lending institution; it is only a mortgage loan agent’s opinion that you will be able to obtain financing.

Virtually anyone can achieve pre-qualification status.

Pre-approval, on the other hand, signifies that the application has been taken through a rigorous procedure.

Pre-approved buyers enjoy these benefits:

1. If you make an offer on a home and then apply for a loan, you are at the lender’s mercy. He sets the interest rate and points, aware that you do not have time to shop around.

2. Pre-approval saves time spent looking at houses you can’t afford.

3. If you rely on your lender to tell you what you can afford, you may end up with a high mortgage payment. Most people can qualify for more than they feel comfortable paying.

4. Having a pre-approval letter from a lender gives you an edge when multiple offers have been made on a house.

5. Pre-approved buyers can generally close escrow more quickly. Once you submit your credit package, most of the legwork has already been done.