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The Difference Between a Mortgage Pre-Qualification and Pre-Approval

pre1If you are thinking about buying a new home and have been researching mortgages, you have most likely come across the terms “pre-qualification “and “pre-approval”. Even though these terms are self-explanatory they are quite different in mortgage financing.  In this blog we will explain the difference between a mortgage pre-qualification and pre-approval.

Pre-Qualification – Your Mortgage Option

The pre-qualification is the first and easiest step on the way to getting mortgage financing for buying a new home. You will meet with mortgage lender who will assess your financial history, current income, and all debts that you have. Using this information your lender will calculate how much mortgage financing you may qualify for when you are ready to purchase a home.

Your mortgage lender can also answer your questions that you may have about the lending process, including the interest rate that you qualify for, and how much money you will need for your down payment.

Pre-Approval – Conditional Mortgage Commitment

After pre-qualifying for your mortgage and ready to look for a new home, you will start the pre-approve process of the mortgage. During this time your mortgage lender will take a closer look at your financial situation. This will include pullingpre2 a credit report so they can assess how much of a risk they will have if they lend you money for the mortgage. During this time you will also complete a full mortgage application so your lender can get a conditional approval for a specific amount of money for your home purchase. You will now also be informed about the interest rate and terms of the mortgage once you find a home and complete the purchase.

Finding Your Home-Finally

After being pre-approved and receiving a conditional commitment from our lender, you can go find your new home. You now know what price range and what you can afford, you will also find that sellers are more receptive to any offer from you being pre-approved. It shows the sellers that you are a serious buyer who is ready to purchase their home.

moo thorpe headshotWhether you are selling your home, or buying a home, I can help you with your endeavor. Please contact me at 505.780.0310, or email me at moo@moothorpe.com and I will be happy to assist you.

 

 

 

 

 

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