A Pre Qualified Vs Pre Approved Mortgage

Dated: 11/25/2014

Views: 896


According to a recent article published by the Daily Press, home sales throughout the Peninsula increased in October. The Real Estate Information Network (REIN) of Virginia Beach reported 497 new and existing home sales across the area. It’s a 13.2 percent increase from October 2013. Home sales are on the rise in Virginia Beach, and the market is transitioning into a seller’s market.

In its simplest terms, a seller’s market is a marketplace saturated with buyers. The demand for a property is greater than the current supply of homes. Houses located in desirable neighborhoods will potentially draw multiple offers and often sell for more than their asking price.

As the local housing market rapidly transitions, homebuyers must step up their buying tactics. The competition for a single property is about to increase, which means closing on your dream home will require forethought and the ability to act quickly.

You’ve heard about the importance of pre-qualifying and being pre-approved for a mortgage. Both actions lay the right foundation for buying, but is one better than the other or are they equal?

Pre-Qualification Mortgage Facts

The first and simplest step in the mortgage process is pre-qualification. It’s the initial moment when you give a potential lender a peek at your financial status. They’ll review your current debt, income, and assets. They’ll evaluate whatever financial information you provide, which means anything left out can cause a pre-qualification to return with a false outcome. The result of the process will be an estimation of the mortgage loan you could qualify for.
Pre-qualifications are handled via the phone or Internet. There are no associated fees. The purpose of pre-qualification is to gain an educated opinion of whether you’ll be eligible for a loan. It’s not a sure thing, and it’s ultimately a best guess. In the grand scheme of home buying, it carries far less weight than a pre-approved mortgage.
Pre-Approved Mortgage Facts
Pre-approval is the second step in the mortgage process. It’s a more complex and involved step involving the completion of an official mortgage application. The lender will require documentation and approval to perform an extensive financial background and credit rating check. It’s likely an application or processing fee will need to be paid up front.
Pre-approved mortgages are sought out before a buyer decides on a property to pursue. Any reference to “property” on the application will be left blank until you decide on the property you’ll be closing on.
Once the application is complete, the lender will analyze the provided information. You will receive a specific mortgage amount for which you are already approved. An estimated interest rate will also be included.
The “Pre Process” with Greater Weight
Potential homeowners often interchange the terms of pre-approval and pre-qualification, assuming they mean the same thing. Such an assumption is incorrect. When it comes to the “pre process” with greater weight, pre-approval wins by a long shot.
A pre-qualification is a great place to start if you’re contemplating homeownership. It provides a guess as to whether you can apply for and successfully receive a mortgage loan. However, the estimation is entirely dependent on the information you submit. It doesn’t always take into consideration your credit score, which is a major factor lenders consider.
Sellers rarely take a letter of pre-qualification into consideration when a potential buyer makes an offer. A pre-approval letter holds much more weight. It shows the seller a sure thing, and it indicates a buyer who is ready to strike a deal quickly. It’s a time saver because it hones the homeowner in on properties they can afford, and the seller sees an offer that is not contingent on financing. It’s a win-win, and it makes the closing process move smoothly and quickly.
Getting Ready to Buy

If you’re seriously contemplating homeownership, the first step to take is simple: You
must get your credit house in order. Once your financial house has been thoroughly cleaned and prepped, your next step will be to apply for pre-qualification. If the pre-qualification presents positive results, your third step will be to seek pre-approval.

A pre-approved mortgage is good for approximately 60 days. It would be wise to start your home search during the pre-qualification and pre-approval processes. If you have a good idea of potential properties, you’ll be ready to move as soon as your pre-approval arrives.
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Chenea Powell

Whether it is your first home or the home you plan to retire in, I will be there to ease the process every step of the way! I find great pleasure in helping people achieve their goals in real estate a....

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