Pre-Approval

How is pre-approval different from pre-qualification? What are the advantages of each and which option is the best for you?

Pre-qualification. This is an assessment by the Mortgage Company, based on certain basic information given by the borrower (e.g. employment, income, asset information, current monthly debt, and credit worthiness). Based on this quick evaluation the Mortgage Company makes a tentative decision to pre-qualify the borrower for a certain loan amount. This does not commit the Mortgage Company to a final approval and is only an opinion.

Pre-approval. Like a pre-qualification, a pre-approval involves a Mortgage Company making an assessment of a borrower's buying capacity based on her or his profile. However, unlike a pre-qualification, with a pre-approval the Mortgage Company also checks the applicant's credit and verifies her or his overall borrowing profile. It takes longer to process, and will require more comprehensive documentation, but gives a clearer and more definitive guarantee of the loan amount a borrower is entitled to.

Why choose pre-approval? It's advisable to go straight to a pre-approval for several reasons. A pre-approval can strengthen your purchasing power, as it is a far more accurate evaluation of how much house or real estate you are capable of buying. The pre-approval will be more appealing, and thus perform better, than a pre-qualification in a competitive market. It's also more efficient since it reduces the time your Mortgage Company will need to process and fund your loan.

For more information on any of these issues, contact a local HomeSense® Realty Agent.