Pre-Qualified verses Pre-Approved: Know the Difference
As a Realtor, speaking for me only, I will not take any one out looking for homes if they are not Pre-Approved. Not Pre-Qualified but Pre-Approved!
Let's break each one of these down....
Pre-Qualified means a lender collects some basic financial information from you to estimate how much house you can afford.( I am highlighting to differentiate the two). You can also describe your credit, debt, income and assets, although application processes vary by lender. Based on this overall financial picture, the lender estimates how much you may be able to borrow.
Getting pre-qualified gives you a sense of your financial readiness and introduce you to various mortgage options that you may qualify for.
Estimates, May, Some. describe are a words associated with Pre-Qualification.
Pre-Approved means that your are required to provide proof of your financial history and stability. The lender will verify your income, employment, assets and debts, and will check your credit report. You can get a pre-approval letter, which states the amount and type of mortgage the lender is willing to offer, along with the terms. You can show the letter to sellers and their real estate agents when making offers on homes. Pre-approval is the word
Required, Provide, Verify are words associated with Pre-Approvals.
The reason why, I choose to take pre-approved clients out, is simple, they have verification of what they can afford. No one likes window shopping if they cannot purchase. If you are not pre-approved, you may be looking at homes you cannot afford. There is nothing more heartbreaking than finding a home you love and can't buy it. Ughhh!!!
Second time homebuyers who are selling and buying, please get pre-approved and have a lender look at your situation thoroughly to see how you can and should maneuver as well. There are many options that can work for you specifically.
Fist-Time Buyers.....You can see where are under pre-qualification but I say get Pre-Approved before you go out house shopping. You will know exactly what you can afford financially.