The gap between pre-qualified and pre-approved is very broad when it comes to mortgage applications. You need to know the meaning and complications of both terminologies in order to prepare yourself for the occasionally rough ride along the road to mortgage that lies ahead.
The simplest phase is the first, which concerns the pre-qualification process. It involves giving all your financial data, debt, income and assets, to the lender from whom you want to get a mortgage. Deciding on the qualifying amount hinges on the lender’s evaluation of your information. Pre-qualification is usually free and can be accomplished over the Internet or the telephone.
The amount stated during pre-qualification acts as an indicator of an amount you can look forward to, but it does not guarantee anything. It does not hold the same weight as pre-approved because it is a quick process that is dependent solely on the information that the buyer provides to the lender. Pre-approval is the next step and it is much more complex.
An official mortgage application which there is a fee for, is mandatory so as to qualify for pre-approval. The lender can uncover your credit rating and all your financial data via the application. The specific amount that you have been granted as well as the interest rates of the loan will become apparent to you at this stage in the procedure. You might even be able to lock in a specific rate.
An exact loan amount is established in writing with pre-approval but it is still considered conditional acceptance. The benefit to this is that at this point you know what price level you need to look for when searching for a home. From the seller’s perspective, this gives you a buyer’s advantage as pre-approval puts you one step closer to an actual mortgage. Both pre-qualification and pre-approval are useful because they inform potential buyers of the price level they should be looking for when shopping for a home. A final sale will not be contingent on obtaining financing, which will hasten the process and you will refrain from wasting time.
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categories: mortgage pre-approval and pre-qualification,mortgage,home loan,home sell,finance,real estate,business,business and finance
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