Navigating the mortgage process can be challenging at times, especially if this is your first time purchasing a home. During the process, you may have heard the terms pre-approved and pre-qualified and wondered what exactly they mean and how you can achieve this as well. While both are great, they are very different from one another. You may brush it off thinking getting one over the other is no big deal as long as you have one of these on under your belt; however, getting pre-approved rather than pre-qualified, or vice versa, can make all the difference in securing your dream home. This may sound stressful but there’s no need to worry. Here at Ace Mortgage Loan Corp., we are going to break it down for you so you know which one to go for.
What Does Pre-Approved Mean?
Being pre-approved basically means that you have been pre-approved for the loan amount you applied for. This is great news and gives you a head start. Now that you know how much you are approved for you can have an idea of what your budget is. Once you find a home that you love and want to make an offer on you can reach out to the seller and start negotiating with them. This will also help you stand out from others who are looking into purchasing that home as the seller will like that you were pre-approved. Although, it is important to keep in mind that being pre-approved for a certain amount does not mean that you are guaranteed to get that amount. You still have to fill out the application and go through the entire process of underwriting before having this amount finalized. During this process you are also going to be asked to show a lot of different kinds of documentation, meaning that if this documentation does not meet certain standards you could lose some of that loan amount once finalized. Keep all of this in mind once you begin to make home offers to the seller.
What Does Pre-Qualified Mean?
Being pre-qualified is very similar in that you are being approved for a loan amount by the lender but it is not yet finalized. This may have you asking what the difference is compared to pre-approved. The difference is that pre-qualified is a likely approval for the loan up to a certain amount while pre-approved is likely approval for a loan of the exact amount you asked for. Pre-qualified is a pre-approval for a loan based on your financial situation as opposed to just what you want the loan amount to be. The problem with pre-qualification is that you get the pre-qualification without any sort of verification on the information you have provided. Meaning that if you provided an asset you thought was worth 200k but it was worth 100k, you may get approved for less than your pre-qualified loan amount. While a pre-approval will look good for the seller, a pre-qualification will not make a difference. This type of situation is more so for you rather than the seller.
Which Should I Get?
If this is your first home purchase then we recommend going for the pre-qualification since it does not take a toll on your credit score and will give you a good foundation. However, if this is your 2nd, 3rd, or 4th home then we recommend going for the pre-approval. This is especially recommended if you know you want to and can purchase the home within the next few months. Homes are constantly being bought and sold making securing your dream home more of a rushed process. For this reason, you should focus on pre-approval if everything else is already adding up.
For more information on pre-approvals and pre-qualifications, Ace Mortgage Loan Corp. is the team for you. We have all the information on both options and can help you figure out which one is best for you and your situation. We also can give you any information you may need on other aspects of homeowning and purchasing. To learn more about our services and how we can help you, give us a call today at (954) 866-3961.