The Difference Between Being Pre-Qualified & Pre-Approved for a Mortgage

Today’s blog I’m going to talk about the difference between between being pre-qualified and pre-approved for a mortgage.

Going home searching without a preapproval is like going outside without any clothes on, OK that might be a little more extreme, because you’re not gonna get arrested for not having a preapproval letter, but wearing clothes and being pre approved will get ya closer to home ownership. 😁

Let’s talk about pre-qualification. This can be as simple as giving the lender your numbers over the phone or even online. Numbers meaning income, debts or assets. Nothing verified. Usually no credit pulled.

Pre approval is where you gotta prove your numbers via bank statements, pay stubs, credit reports, employment verification and other lender requirements. Some lenders run you through underwriting ahead of time. This is even better than just being pre-approved. It helps to eliminate any last minute surprises and makes the home buying process less stressful.

Why should you get pre-approved before looking at homes?

1. You will know exactly how much you can afford payment wise and total sales price.

2. You will know what type of loan you’re gonna do, which will help us to better structure the contract.

3. If you were to look for a house and fall in love with one just being pre-qualified, you would have to go to your lender and start the process. That would waste precious time, because sellers will not accept just a pre-qualification letter. Another buyer who is pre-approved could end up getting the Home instead.

4. In today’s Covid environment sellers want to make sure the buyers who are coming into their house are serious buyers. Not that a pre-approved buyer can’t be walking around with Covid, but it does eliminate the tire kickers.

5. It adds a little layer of safety for the real estate agent. Meeting strangers can be a little nervy and sometimes dangerous, so A buyer getting pre proved can help alleviate those fears

So there you have it, The difference between being pre-qualified and pre-approved. If you’re wondering the best place to start, that is usually with your own bank, but if you don’t have a lender you trust, I can recommend a couple good ones. Just give me a call or text at 904-910-3516.

Thank you for making your way here! I give away free guides that talk about the home buying and selling process. Just look below the video and you will find them listed there.

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The Ultimate Guide for First-Time Homebuyers
Does Owning A Home Make More Sense Than Renting?
Beware of the Pitfalls of Attending Open Houses
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Know the Difference: Pre-qualified or Pre-Approved for a Mortgage

Being pre-qualified or pre-approved for a mortgage are two different things, and one is not worth a dime.

If you call up a lender and ask them to get pre-qualified for a mortgage they may ask you the following questions:

What is your gross income?
Do you have a car payment and if so, how much?
Do you have credit cards and if so, how much?
How long have you worked at your job?

Each lender is different and may ask other questions, but that’s the gist of it. Usually, at this point if the income and debt seem to jive, you’re pre-qualified for a mortgage. Now hold up! Before you go getting excited, and jump in the car to go look for the house of your dreams, you need to actually make an appointment to meet with a lender to get pre-approved. This is where the rubber meets the road. Being pre-qualified means nothing. Anyone, can get pre-qualified, because the information isn’t verified. A home seller is not going to take your offer serious with just a pre-qualification.

If you’re not sure what lender to call, start with who you bank with. Ask your agent for recommendations. Meet with multiple lenders and compare not only interest rates, but also closing costs as well. Please, whatever you do, do not deal with a lender online. Go see them in person.

For your appointment, you need to bring your tax information, pay check stubs and bank statements. You give detailed employment history, rental history, any other proof of income and again, the list varies by lender. They will let you know everything you need to bring. They will pull your credit and verify the information you give them. They will run your information through their automated underwriting system and if all that checks out, they will issue a pre-approval saying that they have pre-approved you for a mortgage in the amount of xx, what type of mortgage and with an interest rate of x. There will be conditions of that pre-approval. For example, the house you choose has to appraise, and any lender required repairs must be made. During the closing process, they will re-check your credit and re-check that you’re still employed with the same employer, so don’t change jobs or buy anything on credit until after you close.

Now, you can call your agent up and meet with them to start looking for houses. This is where the fun begins. The home buying process can be very fun and exciting as long as you follow a system and you have an awesome real estate agent.

If you do not have an awesome real estate agent yet and you’re looking to purchase a house in the Northeast Florida area, which includes Jacksonville, Clay County and St Johns County, then shoot me an email at pam@pamgraham.com or call me direct at 904-910-3516. I can and will help you with the home buying process to make it go as smooth as possible, and enjoyable as well.

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