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Pre-qualification vs. Pre-Approval
Vicky Olive of Piedmont Preferred Realty serves real estate buyers in
Durham, NC; Chapel Hill, NC; and Chatham County, North Carolina.
From the standpoint of minimizing stress and uncertainty, it’s great to know what loan options are available to you and which homes you should be considering and which you should not. If you are unsure how large a mortgage loan a lender will extend to you, you can find out quickly and easily through pre-qualification. This procedure is different than pre-approval because pre-qualification is merely an informal estimate of what a financial institution will lend you. You will need to know what your monthly debt and your monthly income are in order to pre-qualify yourself.
Pre-approval, on the other hand, is a formal process where the lender examines your finances in greater detail and agrees in advance to a loan amount and terms. This requires that a credit report be pulled from one of the credit reporting agencies. One advantage to this process is that when the mortgage banker has full knowledge of your situation, many more possibilities may prove to be available that will ultimately lead to you getting as close as possible to owning your dream home. Another advantage to having pre-approval is that it makes a contract offer stronger. All things being equal, a seller would likely consider more seriously an offer from someone who is pre-approved because it’s less risky.
It’s so much better to know the reality of your situation, than to be guessing about it!
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For Buyers
For Buyers