Difference between being pre-qualified

By JT Burnside

The Difference Between Being Pre-Qualified and Pre-Approved

Any buyer or seller engaging in the real estate investment cannot miss encountering these two terms. They are common in mortgage transactions and are both main steps in the mortgage application process. They are both types of mortgage approval and refer to the steps taken by the lender to prove whether a client can afford a mortgage. The terms may sound so similar and, that’s why it is vital to know what each term means and the differences between them. On a light note, Pre-qualification is the first step and, it is where the buyer can know the amount of loan they can qualify. The second step is pre-approval which follows a conditional commitment by a lender to grant the buyer the mortgage. Pre-qualification relies on the client submitted data while the pre-approval is verified client data. Let’s get deeper into these below.

MORTGAGE PRE-QUALIFICATION

This process varies by different lenders. Usually, the lender requests the buyer to submit all their money income, assets, credit, and debit details. This information helps the lender to estimate the amount of money that buyer can borrow. This process can even be done online or over the phone since it’s a quick process that takes about three

days to get a pre-qualification letter. Although the pre-qualification letter doesn’t carry much weight as it’s based on only information the client submits hence just an estimate as there hasn’t been much investigation into the client to come up with a good amount. But it still helps the client to have an estimate of what they can afford to buy. The client can still show the pre-qualification letter to real estate agents to show that they’ve been working with a mortgage lender and get introduced to different options.

MORTGAGE PRE-APPROVAL

The verification in this step is much more intense. It requires the buyer to provide documentation on their financial history and income. The lender then checks their assets, employment, and financial stability, not forgetting the credit report. The buyer also has to fill out an official mortgage application form to get pre-approved. If the lender is satisfied with the buyer’s financial records, they’ll offer them a pre-approval letter that shows the amount the lender is willing to loan, the type of mortgage, and its terms. The pre-approval offer is not guaranteed. However, it gives the buyer leverage in a competitive market as it indicates serious buyers.

Getting pre-qualified and pre-approved

are essential and crucial steps for you as a prospective home buyer. It’s because it gives an estimate of the kind of house you can afford. In this warmed-up market, sellers tend to prefer negotiating with buyers who are pre-approved than those pre-qualified. It is with no doubt that Pre-approval also speeds up the home buying process giving one an edge in the market. Do you feel ready to start your homeownership journey? Make the right choice by visiting The Power Is Now Media Inc. Contact JT Burnside a VIP agent or the CEO Eric Lawrence Frazier MBA DRE 01143484 today.

ABOUT JT BURNSIDE

JT Burnside is an active Real Estate Agent in Southern California since 2006.He was born in the Inland Empire and this has allowed him gain the specialized 13 years of experience needed in the area. His key to successful interaction with clients has been listening to their wants and needs and giving them information that ultimately helps them make an educated decision pertaining to their transaction.

ABOUT THE POWER IS NOW MEDIA INC.

The Power Is Now Media Inc. is an advocate for the empowerment of the minority communities all around the United States. We engage in various thoughts of leaders to make sure that you are equipped with knowledge about our economy. We have partnered with First Bank to provide you with products and services that will help you prepare better for the future. We are also advocating for first-time home buyers. The Power Is Now Media Inc. can help make your home ownership dream a reality. Go to www. neverrentagain.com and get started today. Eric Lawrence Frazier MBA, Vice President and Mortgage Advisor of First Bank, NMLS 461807. President and CEO of The Power Is Now Media Inc. www.thepowerisnow.com

References

https://www.nerdwallet.com/article/mortgages/pre-qualified-vs-preapproved https://www.rocketmortgage.com/learn/preapproval-vs-prequalification https://www.investopedia.com/articles/basics/07/prequalified-approved.asp