Home Mortgages: Pre-Approval vs. Pre-Qualification
Homebuyers take a big step in securing a mortgage, and moving into the home they want, when they get a pre-approval from a lender. A seller gives serious consideration to a potential buyer who’s been pre-approved compared to a potential buyer who hasn’t.
A mortgage pre-approval is available for buyers who are further along in their home search, particularly those who have an address for the property they want.
If you’re not that far along, don’t worry. You still can take a step toward getting the home you want with a pre-qualification. RBFCU encourages a potential homebuyer to get a pre-qualification when they don’t have an address of a property.
While a pre-approval is a strong move in the mortgage process, don’t overlook the usefulness of a pre-qualification. When a potential homebuyer applies for a pre-qualification, they are getting familiar with a lender. This engagement can help the process go smoothly when the time comes for a pre-approval or closing on the mortgage loan for the home you want.
Here are some of the details and differences between a mortgage pre-qualification and a mortgage pre-approval:
Documentation and Verification
A pre-qualification requires you to describe your credit, debt, income and assets. It can be done with a simple phone call. The lender could pull your credit report (RBFCU pulls credit when reviewing an application for pre-qualification). The pre-qualification can be issued based on the stated income of the applicant.
To obtain a pre-approval, you’ll have to provide tax forms, pay stubs, credit card statements and your car-loan status. The mortgage lender uses these to verify your income, employment, assets and debts and pull a credit report.
Estimates and Firm Numbers
Upon obtaining a pre-qualification, homebuyers can search the housing market with a good idea how much they can afford. It’s an estimate, yet it’s a good first step to take. It gets homebuyers to thinking about the process. Once they have an address for a desirable property, they’ll know they have to follow up to get a pre-approval by visiting a mortgage officer or the lender’s website.
Although there are no guarantees that a mortgage pre-approval will result with a home purchase, you’ll learn about the options that are available to you that can be beneficial in the future. Just as importantly, your lender will know there’s a better chance that you can pay off the mortgage — and they’ll be more willing to make the loan and get you into the house you want.
Information in this article is general in nature and for your consideration, not as financial advice. Please contact your own financial professionals regarding your specific needs before taking any action based upon this information.
Loans subject to credit approval. Rates and terms subject to change without notice. Mortgage loans are available only on property in Texas. RBFCU NMLS# 583215.