Mortgage Pre-Qualification vs. Pre-Approval: What You Need To Know
Thinking of purchasing a home? Understand the difference between pre-qualifications and pre-approvals.
Buying a home can be confusing – especially if you’re not familiar with industry terms and applications. One topic that’s often difficult to understand is the difference between a mortgage pre-qualification and pre-approval.
See how they differ and learn how you can benefit from both.
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Mortgage Pre-Qualification
Early in your homebuying journey, you can get a mortgage pre-qualification. Based on the information supplied on your loan application, a lender provides a close approximation of what you’ll qualify for if you were to submit a formal application that undergoes a more in-depth review.
At A+FCU, we pull a credit report and base your pre-qualification on the information that appears on the report along with information provided on the application, but every lender is different.
Pre-qualifications can be beneficial if you’re planning on buying a house in the future and want to look at how lenders view your financial history. It can also help you start shopping around for a house and give you a good idea of what you can afford and thus what to look for.
Mortgage Pre-Approval
As you prepare to make an offer on a home, you’ll want to obtain a mortgage pre-approval. This requires verification of your income, assets, and debts, as well as a credit report. Once authorized, your loan pre-approval is good for 30-90 days, depending on the lender.
A pre-approval can be critical and give you a competitive edge when making an offer on a house – this shows you have secured financing and will have the necessary funds to move forward with the purchase.
Which One Do I Need?
Both can be beneficial depending on where you are in your homebuying journey, but ultimately, a mortgage pre-approval will help you most when placing an offer on a home. While a pre-qualification tells you how much a lender is willing to loan you, a pre-approval backs your offer up and lets the seller know you’re a serious buyer.
Next Steps
To receive a pre-qualification or pre-approval from A+FCU, submit an online loan application. Once you submit the application, we’ll send you a pre-qualification letter and a mortgage expert will contact you to talk about your options as well as answer any questions you may have. Along with the pre-qualification letter, you’ll receive a list of required documents needed to get a pre-approval. See the applicant checklist here to get an idea.
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