Pre-qualified or Pre-approved?
When you start looking for a home or thinking about looking for a home, one of the questions you are definitely going to run into is: should I be prequalified or preapproved for a loan? It’s an important distinction.
Usually, getting prequalfied for a mortgage, in my opinion:
1. is usually extremely easy unless you have obvious blemishes on your credit; and
2. means almost nothing.
Twixt the prequal and the purchase, there lies many a slip.
Ideally, once you get serious about buying a home, you should get a preapproval letter. A preapproval is also referred to as a credit-approval and involves amongst other things getting a loan application filled out, having your credit screened and getting an approval from a lender that - as long as the appraisal bears out on a home - they will fund the loan.
Here’s another reason a preapproval means more than a prequalification - when you meet with a lender you will have your questions answered and get a better idea of what your monthly payments will be. A computer doesn’t do that. Or answer questions regarding your specific financial situation.
