What is the difference between getting pre-qualified or getting pre-approved for a mortgage loan when buying a home? Well that’s what we’re talking about today and we’re starting right now. Hey everyone welcome back to my channel I’m Angela O’Hare a local realtor here in Las Vegas Nevada with The O’Hare Team at Urban Nest Realty. If this is your first time here, consider subscribing by clicking that button right down below and even that little bow for notifications. As you prepare to finance a new home, chances are you’ve come across a mortgage pre-qualification or a mortgage pre-approval or possibly even both. Some people use those terms interchangeably, but there are differences that every homebuyer should understand. What does it mean to get pre-qualified vs. pre-approved for a mortgage and what is the difference between the two? Well, let’s take a look. So what exactly does pre-qualifying mean? Pre-qualification is often seen as the first step in the mortgage process and pre-approval is the next step. With pre-qualification you’ll supply an overview of your financial history to the lender, including income, assets, debts and credit score.
The lender will review this information and give you an estimate of what you would qualify for. The key word being estimate. Mortgage pre-qualification doesn’t always require documentation of your financial history, it could be self-reported. Pre-qualification can be done over the phone or online and there’s no cost involved. It’s quick and it usually takes one to two days to get a pre-qualification letter. Keep in mind that a loan pre-qualification does not include an analysis of your credit report or an in-depth look at your ability to actually purchase the home. It’s based solely on the information that you hand over to the lender. And it really doesn’t mean much if you don’t provide accurate data. Your pre-qualified amount is not a sure thing because it’s only based on the information that you’ve provided. It’s just an amount that you might expect to get approved for. A pre-qualified buyer does not carry the same weight as a pre-approved buyer, who has been more thoroughly investigated. So what does pre-approval mean? Getting pre-approved is the next step and it’s much more involved.
You must complete an official mortgage application in order to get pre-approved and you’ll have to supply the lender with all the documentation that is needed, like pay stubs, bank statements, w2’s, anything about your assets, your salary and any other obligations that you may have. To perform an extensive check on your financial background and credit rating. The lender can pre approve you for mortgage up to a specified amount after reviewing your finances. You also have a better idea of the interest rate you’ll be charged on the loan at this point, because it is often based in part on your credit score and you might even be able to lock in an interest rate. You’ll receive a conditional letter in writing for the exact loan amount, allowing you to look for a home at or below that price level. This obviously puts you in an advantage when dealing with the seller, because they’ll note that you’re one step closer to getting a mortgage loan.
The other advantage of completing a pre-approval before you even start looking for a home, is that you actually know how much you can afford. You won’t waste time guessing or looking at properties that are way beyond your means. Getting pre-approved for mortgage also enables you to move quickly when you find that perfect place. And it lets the sellers know that your offer is serious in a competitive market. Here are some key takeaways on on the different between a pre-qualification and a pre-approval. Pre-qualification is based on the data that you provides to the lender, who will give you a ballpark estimate of what you can qualify for. Your pre-qualified amount is not a sure thing because it’s based on the information that you have provided.
A pre-approval letter is the real deal, a statement from the lender that you qualify for a specific mortgage amount, based on an underwriters review of your financial information. Such as credit report, pay stubs, bank statements etc. While pre-qualification can be helpful in determining how much a lender is willing to give you, pre-approval letter will make a stronger impression on the sellers and let them know that you have the finances to back up the offer. If you’re serious about buying a house, then you need to get pre-approved right away! Let me know if you need a referral for a trusted lender. When the housing market is hot homes sell fast, sometimes within hours of being listed.
If you already have financing, you too can move fast and that gives you an immediate advantage over other buyers I hope this has helped you learn what the difference is between a mortgage pre-qualification and a mortgage pre-approval when buying a home. Let me know in the comments if you’d like to get started in the home buying process. If you like this video be sure to hit the thumbs up button, leave a comment down below, share with the friend and consider subscribing to my channel if you’re interested in learning all things real estate in the Las Vegas Valley. Thank you so much for watching and I’ll see you on the next one!.