Pre-qualified versus Pre-approved

Q: I've read it's a good idea to get pre-qualified or pre-approved for a mortgage before going house hunting. What is the difference between these terms?

Getting pre-qualified is the first step in the mortgage process. It involves supplying my assistant with basic information regarding your debt, income and assets.   From this information, I can get an idea of the mortgage amount for which you qualify, and it can be done at no cost to you.

Getting pre-approved is the next step. The process requires that you complete a mortgage application (and usually pay an application fee) and supply me with all the necessary documentation to check your financial background and credit rating. You will then be told the exact mortgage amount for which you are approved.

The obvious advantage of completing both of these steps before you look for a home is knowing in advance how much you can afford to spend. You won’t waste time looking at properties beyond your means. The initial pre-qualification stage allows you to discuss with us any goals or needs you may have regarding your mortgage. I can then explain your mortgage options and recommend the type that might be best suited to your particular requirements.

Getting pre-approved for a mortgage also enables you to move quickly when you find the home of your dreams and make an offer that is not contingent upon obtaining financing. It also lets a seller know your offer is serious and could prevent you from losing out to another purchaser who already has financing arranged.

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Laure Feld,CMPS Certified Mortgage Planning Specialist 309-688-5568