Pre-Approval vs Pre-Qualification – Which is Better? One is good, and the other is much better. Being Pre-qualified requires a conversation with a lender, and typically involves a credit pull. Pre-Approval is different. See how below.
Getting pre-approved takes an extra step or two. So it is considered a stronger status in the all-important seller’s eyes. In the video below I explain the difference. Stay tuned. In the next two minutes you will see how and whay pre-approval is preferred, different, and better over-all.
👦 Pre-Approval vs Pre-Qualification – Same thing, Right?
Now we should talk about the difference between Pre-Approval vs Pre-Qualification. Doing this right will help you avoid lending nightmares and pitfalls.
So when you get prequalified, what you’re doing is you’re having a conversation with the lender, you’re telling them what your income is like, what’s your monthly debts are like, what your credit score might be like, and they’re pre-qualifying you based on what you’ve said.
When you get preapproved, they take that information and they support it with documentation, so they’re going to ask you to supply W2’s pay stubs, bank statements, tax returns, that sort of thing.
Once they get that, then they are going to pre-approve you.
It’s a much stronger position to be in.
And it looks a heck of a lot better to sellers when you come in with a preapproval rather than just getting prequalified.
😵 Why Bother with Pre-Qualification?
There are some bennies to going through this strep that many skip. By starting here you are able to see if there are any dings on your credit. Also, the conversation that you have thith the loan officer should shed light on your situation.
Know Your Lender
Getting a house is a big endeavor. When you decide to go for it you will need a team of professionals to get across the finish line. Perhaps the most important pair of your team is the lender and agent. They will work in concert to make your dream home experience a reality. Get to know an experienced local real estate professional; that person will help you find other industry vendors who can be in your court as the process continues.
Every home buying experience begins with money. Some (about 20% of all home buyers) are fortunate enough to be able to make their purchase with all cash. The rest of the purchases are done with down payment money + a mortgage loan. When you work with a lender you are sharing sensitive info (income, social security number, marital status, debts, credit info, etc). So, obviously, you want to make sure that who you are giving this information is trustworthy and knowledgable.
Two separate lenders can give two different costs. It’s like buying anything else. It’s easy to overpay. When you are ready to make a home purchase it’s a good idea to begin with getting referrals from people who are experienced. If you have an existing relationship with a real estate agent, start there. Most professional agents are well connected and work with lenders who will not take advantage of their clients. The lenders want repeat business form the agent community. A bad reputation is like a wild-fire; it spreads faster. A good reputation is like gold.
Pre-Approval Strengthens Your Offer
Now you know the difference between Pre-Approval vs Pre-Qualification. As you can see having a pre-approval is going to settle a lot of questions in any sellers mind. Having all of the appropriate boxes checked on the loan form will demonstrate ability and instill confidence.
So down below, I’ve got a free goody for you, a home buyer checklist. You can click on that and download it and it’ll be your guide. As you move through the home buying process, it’ll help you see what’s coming next.
More Goodies for Homebuyers
And by the way, I’ve got a link to another video down below. What the heck is a comparative market analysis or a CMA? You can watch that now.
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And Hey, thanks for watching this video. See Ya.
Do I Need to Be Pre-Approved For A Mortgage to Make an Offer on a Home? – by Karen Highland
Buyer Tips: A walkthrough of the Mortgage Process – by Anita Clark
When and Why Should I Get Pre-Approved For A Mortgage? – by Kyle Hiscock
How To Buy A Condo For The First Time (Condo vs House) – by Joy Bender
Why working with a mortgage broker is better than a big bank – by Glenn Shelhamer
Tips For Millennial Home Buyers – by Eric Jeanette