We break the mortgage jargon down.
The mortgage process can be a jumble of words and financial terms that may seem hard to understand. Two things that sound very similar are a Pre-Qualification and a Pre-Approval, but in the mortgage world, they’re very different. So what are they?
Pre-Qualification is an estimate of borrowing power. You can be issued a Pre-Qualification letter from a lender that states, based on your income, credit, & debt levels, that you are likely to qualify for a mortgage for “x” amount of dollars. This can be accomplished by having a simple conversation with a lender. This letter will give you a limited amount of purchasing power when you’re searching for a home.
Pre-Approval is a more complete process. Here you have actually completed the application with the lender, supplying them with your income and employment information. The lender will also run a credit report and send your application through an automated underwriting process. It also helps the seller know you are a serious buyer, because you’re one step closer to completing the mortgage process.
A Pre-Approval or a Pre-Qualification are NOT absolute loan commitments. But they’re important steps to help you through your homebuying journey.
Interested in Pre-Qualification or Pre-Approval? Want to speak with a loan expert about your unique situation? Get started today at goodmortgage.com/apply-now!