If you’re interested in buying a home, knowing how much you can afford is an important first step. This all starts with getting pre-qualified and pre-approved. If you’re unsure what the difference is between the two or which you should pursue, continue reading to learn more.
What Does Pre-Qualified Mean?
Getting pre-qualified is fairly simple. During this process, the borrower will work with a mortgage lender to find out if you qualify for a loan. You’ll answer some questions about your earnings, assets, liabilities, outstanding debts, and investments. Since they’re not verifying your income or credit, you can usually complete this process over the phone or online (that will come later in the pre-approval process). Your loan officer will then do a few calculations and let you know if you’re a good candidate to apply for a mortgage loan with them and how much you may qualify for.
Keep in mind, at this point no commitment has been made on either side. The pre-qualification analysis just gives you a good idea of what you can afford which can help as you and your real estate agent shop for homes.
What Does Pre-Approved Mean?
The pre-approval process is much more comprehensive than the pre-qualification process. The lender will verify your income, pull your credit report, and request other documentation of your financial assets. This may include bank statements, W-2s, 1099s, pay stubs, and prior tax returns.
Once you’ve been pre-approved for a mortgage loan, you’ll receive a pre-approval letter. This letter is often good for a certain period of time and will state how much you can borrow and the interest rate you can expect.
Having a pre-approval letter can make the home buying process easier and provide you with more leverage if you’re up against someone else for a home as sellers often take buyers who have been pre-approved more seriously than those who haven’t.
Pre-Approved vs Pre-Qualified: The Bottom Line
Both the pre-qualification and pre-approval process are important steps in the homebuying process. People’s Community Federal Credit Union offers amazing rates and exceptional customer service among its members. When you’re ready to start the mortgage loan application process, turn to us. We’ve been serving the Clark County WA area for over 69 years.
Pre-qualified vs Pre-approved in Vancouver WA
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