The terms “pre-approval” and “pre-qualification” have likely come up while doing your research as a homebuyer. Understanding the differences between the two well set you up for success down your path to homeownership.
Pre-qualification: The First Step to Your Ideal Home
When meeting with your Mortgage Loan Originator (MLO) for the first time, they’ll have what we like to call a hopes and dreams conversation. This conversation is to understand ultimately what you’re looking for when it comes to your next home. Your MLO will ask questions around:
- The type of home you’re dreaming about
- What your hopes are for you and your family
- Your lifestyle requirements
- Your income and monthly budget
By the end of this call your MLO will likely be able to pre-qualify you and suggest a price range for your next home based on this conversation. However, to get an accurate view of how much home you can afford your MLO and Realtor® will likely recommend you getting Pre-approved.
Pre-approval: Figuring Out Your Home Affordability
A pre-approval is an official letter prepared by your MLO which states documentation has been reviewed to confirm your current income, credit, debt and assets.
This letter generated by Homebridge gives you a tool to shop for homes within your means and demonstrate to the seller of the home you’re interested in that you’re a serious buyer.
By going through the pre-approval process, your MLO will review your documentation to give you an accurate price range that not only fits your lifestyle but ultimately your goals and dreams.
So, what are the differences between getting pre-qualified and pre-approved? In short, it’s the confirmation that comes through the review process of your documentation to better qualify you for a loan. Please note, while a pre-approval can help you accurately determine the price range of home you can afford, you will still need to go through the full loan approval process once you’ve found the home of your dreams.
Not yet sold on getting pre-approved? Click here to read up on reasons to Get Pre-approved.