Is Being Pre-Qualified & Pre-Approved for a Mortgage the Same Thing?
The terms ‘pre-qualified’ and ‘pre-approved’ are often used interchangeably and most people do not realize that there is actually a difference between the two. And, not only is there a difference but a significant one that could impact your home buying process. While getting pre-qualified for a mortgage is not a bad thing, it is not as good as being pre-approved. So, what is the difference between the two and why do you need to pursue not just pre-qualification for your mortgage, but pre-approval? One BIG reason!
Pre-Qualified Does Not Mean You Will Actually Qualify for Your Mortgage
We see how this can be confusing but allow us to elaborate. When you get pre-qualified for a mortgage you are essentially getting an idea of the approximate mortgage amount for which you will qualify. But, when it all comes down to it, it is not as in-depth as the process and paperwork involved with getting pre-approved for a mortgage. Therefore, when it all comes down to it, you may not actually qualify for that amount you are ‘pre-qualified’ for. This could be a big problem if you put an offer on a home and begin the home buying process only to realize you cannot actually get the mortgage you need to buy your home.
Why Mortgage Pre-Approval is a Must
Now that you know a mortgage ‘pre-approval’ is little more than some approximate information, you can begin to see why you need to get pre-approved for a mortgage. When you get pre-approved for a mortgage with a mortgage letter you will receive an official letter. Your pre-approval letter is a statement from your mortgage lender that you are able to secure the mortgage loan amount that is stated in the letter. This will make you a much more appealing potential buyer to a seller because there is a much lower chance that the deal will fall through. While a cash buyer is always the most attractive buyer, having a pre-approval letter is as close to being a cash buyer as you can get without actually being a cash buyer. Your offer will be more reliable and trustworthy and therefore you will be much more likely to get your offer accepted on the home you want.