Pre-Qualified or Pre-Approved — What’s the Difference?
Pre-Qualifying vs. Pre- Approval in buying your new Encino home — what’s the difference? Which is more appealing? When buying a home the terms pre-qualifying and pre-approval are used frequently and knowing the difference can help take some of the stress out of the home buying experience.
Pre-Qualifying is just the beginning…
The lender will briefly look at your overall financial situation and give you an idea of what you qualify for. This process can be generally done over the phone and is based on information you provide to that lender. It is not exact and most of the time does not include a credit check. Pre-Qualifying is not as secure because it is just an estimate. On the bright side this will help you get you in the ballpark of homes you may qualify for.
Pre-approval is a more involved process.
For a pre-approval you will complete an official application and submit the necessary documents to be reviewed. The lender will then check your financial background and will do a credit check. This option is a more accurate and means you are more likely to be approved for that loan amount. With a pre-approval you can search for homes with confidence not having to worry if you can or cannot afford it.
Which should you choose?
Pre-approval. No doubt about it. A pre-qualification letter won’t get you very far with your offer, since it doesn’t guarantee your loan… it just indicates what you might be approved for, if all of your paperwork and credit line up with what you told the loan officer over the phone.
If you’re a serious buyer, spend the time (sometimes under an hour of your time) to gather the paperwork and send it to your mortgage specialist. The last thing you want is to make an offer on a house and not get it accepted because you chose the easy way out and only got a “pre-qual”.