Do you know the difference between pre-qualification and pre-approval?
I wanted to share this great information from my website on my blog to help anyone who has the wrong idea about being pre-qualified and pre-approved for a mortgage.
Don’t Go Shopping for a New Home Before You Know Exactly How Much You Can Spend!
Pre-Qualification vs. Pre-Approval
Pre-qualification is not a mortgage approval but simply an estimate of what you can afford. The lender asks basic information regarding your income, monthly debts, credit history and assets, and then uses this information to calculate an estimated mortgage amount. Based on what you say, the lender has not committed to your loan, therefore you have not received guaranteed funds.
Pre-approval is a bona-fide loan decision based on the applicant’s credit report, verification of income, asset and debt information provided by the customer and information provided during the application. When a mortgage lender issues a pre-approval it means that they will fund the loan pending a satisfactory appraisal of property, a title report, and purchase contract.
When you get pre-approved for a mortgage, you are a stronger buyer with a greater chance of having your offer accepted. For example, if the seller receives multiple offers and the other applicants are not pre-approved, your application may look better to them as they do not have to wait for the other buyers to go through the approval process.
You might have an idea of the loan payment and mortgage you can afford. But will the bank feel otherwise? It’s always best to pre-qualify for a mortgage so you know exactly how much a financial institution would be willing to lend you.
In the pre-qualification process, you will find out:
– How much cash you will need for the down payment.
– The minimum down payment, and advantages of higher down payments.
I hope this helps! Call me and we can help you pre-qualify!
Coldwell Banker Residential
130 Dean Drive
Tenafly, NJ. 07670