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Should You Get Pre-Approved?

Should You Get Pre-Approved?

Greg Skinner March 19, 2021 Buying a Home Leave a Comment

Today's very competitive market can make home-buying more difficult, but there are ways to succeed in getting your dream home.

Serious home-buyers need to start the process in a lender's office getting pre-approved or pre-qualified.

Both pre-qualification and pre-approval are types of mortgage approvals and they refer to the steps a lender takes to verify that you can afford a mortgage.

Mortgage approvals are handled differently by every lender. Many lenders use pre-qualification and pre-approval interchangeably. Neither is a guarantee that you’ll be able to close on the loan, but it gives you a good estimate about what you can afford.
What Is Mortgage Pre-qualification?
A pre-qualification generally means that a lender collects some basic financial information from you to estimate how much house you can afford.

It’s common for a pre-qualification to rely on self-reported information, instead of verifying by pulling your credit report or reviewing financial documents.

This means a pre-qualification is typically a ballpark estimate. It also means it’s less reliable than a pre-approval, which usually involves your lender checking your credit score and reviewing bank statements and other documents.

You will receive a “pre-qualification letter” you can show to an agent or seller as proof you’re working with a lender once you’ve been prequalified.  This typically won’t be as good as a pre-approval since a lender hasn’t yet verified your information. 

Getting pre-approved is a step beyond pre-qualification and shows you’re serious about buying a home. Pre-approval is a more official step that requires the lender to verify your financial information and credit history.

Pre-qualified Vs. Pre-approved For Your Mortgage: What’s The Difference?
Both pre-qualification and pre-approval provide borrowers with an estimate of how much they can afford to pay for a home. However, pre-approval is a more official step that requires the lender to verify your financial information and credit history.

Mortgage approval is an estimate by the lender and shows how much you can afford to borrow, what your interest rate could be and how much your mortgage payments could be. Your real estate agent can use this information to focus on the homes you can afford.

Without first securing approval from a lender, the seller might not view your offer as credible. They may not accept an offer from someone who is not pre-approved.

Remember, after you make an offer on a house, your full mortgage approval will depend on the home being appraised by a third party and passing any required inspections.

The Bottom Line
A pre-qualification is a good way to get an estimate of how much home you can afford, and a pre-approval takes it one step further by verifying the financial information you submit to get a more accurate amount.

Getting approved early in your home search is aVIP signature great way to know what you can afford, so you can narrow in on your dream house. 

At VIP Realty, we have helped thousands of people  achieve their dream of homeownership. Greg Skinner is the undisputed leader in 43123 sales area. Greg takes pride in the relationships he builds while working relentlessly on his client's behalves selling commercial, industrial and high-quality residential properties.

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The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. VIP Realty does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. VIP Realty will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

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