Pre-approval vs. Pre-qualification
Pre-qualification is the the previous step to a pre-approval. You may even hear these two interchangeably, but don’t be confused! A pre-qualification is an unapproved estimate of how much you may borrow if you were to get a mortgage. On the other hand a pre-approval is the finalized, permissible amount a person may borrow. You will not be able to get a home that costs more than what the bank will lend you.
What is required
In order to get a pre-qualification or pre-approval there are things that a bank will require from you. Some of these are just for a pre-qualification, but they are all required for a pre-approval. Be ready to turn in:
-Income information: W-2s, tax returns, pay stubs, and any papers that show additional forms of income for at least the past 2 years
-Asset information: bank statements and/or gift letter
-Personal information: passport or ID and SSN
The difference between the two
The pre-approval carries weight when you send a purchase offer on a home you like. A pre-qualification is an estimate of what you may be able to afford, but it is an overview of your finances, that is not verified, which you can get over the phone. A pre-approval is a verified limit a person could spend/afford on a new home! A pre- approval letter shows more seriousness on the buyers side because they have a verified amount they can spend, but also because they had to also fill out a mortgage application as well as pay a fee.
How does it speed up the process?
To speed up your home buying process it is recommended that you get your pre-approval before you start the house hunt! A pre-qualification gives you a good idea of what your house budget will be, but it is not a confirmed amount. It is best to armed with your pre-approval as you are searching for homes, not only to narrow down the homes you will view and you can cut time that way, but to also send an offer right away. It usually takes a few days for your bank to send you your pre-approval letter. In a hot sellers market, homes could be sold within the time you are waiting for a pre-approval. Don’t wait around, ditch the wait and be ready to view houses and send offers on them!
Need a pre-qualification or pre-approval? Get started now by calling Eric Taggesell, VP of Mortgage Lending at Guaranteed Rate Affinity. Call 707-757-6195!
Team up with a local real estate pro when it’s time to sell or buy a home! Contact me at 707-480-9383 or firstname.lastname@example.org.