Distinguishing Between Pre-Qualifications and Pre-Approvals: A Vital Distinction! When navigating the mortgage process, it’s essential to understand the disparity between getting pre-qualified and pre-approved. In a competitive real estate market, making the right choice can be the key factor in securing your dream home or losing it to another buyer.
Navigating the mortgage process involves the crucial steps of pre-qualification and pre-approval, and understanding the distinction between the two can be pivotal in a competitive real estate market, potentially determining whether you secure your dream home or lose it to another buyer.
Being prequalified implies that a lender has assessed your financial situation and believes you are likely to be approved for a loan up to a specific amount. To achieve pre-qualification, you provide your income, assets, and debt information, and the lender uses this unverified data to estimate the likely approval amount. While pre-qualification has benefits such as no impact on your credit score, no cost, and helping you gauge affordability, it does not guarantee final approval.
Benefits of Pre-qualification:
However, despite being an initial step, some sellers may not consider your offer seriously until you’ve progressed to the pre-approval stage.
Pre-approval signifies that a lender has officially approved you for a specific loan amount, backed by a formal letter indicating the approved amount. Unlike pre-qualification, the pre-approval process involves providing documented financial information (pay stubs, statements, obligations, credit report, etc.) for thorough review and verification by the lender. While pre-approval does not guarantee the loan, it enhances your negotiating power, provides a clear understanding of affordability, and allows for a quicker closing process.
Benefits of Pre-approval:
It’s important to note that pre-approval doesn’t guarantee a loan; you still need to go through the underwriting process. However, having a pre-approval letter signals your serious intent to purchase, making you more favorable to sellers.
At Fidelity Home Group, we advocate for full pre-approvals because they are essential in today’s home buying market. Full pre-approvals distinguish themselves by allowing non-contingent offers, ensuring no major issues are overlooked, and enabling a faster closing process due to the work done upfront.
Conducting full pre-approvals involves a meticulous review of income, asset, employment, and credit documents. Although time-intensive, this process proves worthwhile, as it helps identify issues that may be missed during a mere pre-qualification, such as missed expenses, unexplained deposits, and various financial obligations.
Realtors often turn to us because our full pre-approvals enhance the competitiveness of our clients’ offers and contribute to smoother transactions, minimizing stress for all parties involved.
To initiate the pre-qualification or pre-approval process with Fidelity Home Group, contact one of our Mortgage Experts at 888-259-2257, by email, or use our online chat below. Our dedicated team is ready to assist you on your homeownership journey.