Home Buying 101: Pre-Qualified vs Pre-Approval: What’s The Difference?
Figure out your needs
Monthly cost of owning a home
Ideal Neighborhood
Financing Your Purchase
The FHA Mortgage
The Conventional Mortgage
The Adjustable Rate Mortgage
Department Of Veterans Affairs Mortgage
Phase 2: Looking
Looking at homes
Types of homes
Single Family Homes
Town Homes
Condominium
Twin Homes
Multi-Family Homes
Types of sellers
Traditional
Short Sale
Foreclosed
Researching A Home’s Public Information
Phase 3: Buying
Making an offer that counts
The Purchase Agreement
Buyer Letter to Seller
Inspections: Why get one?
Radon Testing
Sewer Line Scope Inspection
Fireplace Chimney Inspection
Mechanicals
Phase 4: Closing
Closing Costs Explained
Title Work
Appraisals
Underwriting
Utility Bills
Preparing for the Closing
The Closing
As a buyer, you can meet with as many loan officers as you want. They each will ask for information from you to verify income and assets, and then can issue a pre-qualification or a pre-approval letter.
Pre-Qualification Letter
This letter isn’t really worth having. It basically states that the buyer applied for a mortgage and that’s all. If it states anything else, it usually will say that it is subject to verification of income and assets. I have had buyers that were pre-qualified, and when we went to write the purchase agreement, their mortgage company turned them down. We then had to shop for a new mortgage product to continue the purchase. Being in this situation adds unneeded stress and worry. It’s just smoother to get pre-approved up front.
Pre-Approval Letter
This letter is really the minimum that you should use during the home purchase process. It means that you have applied for a mortgage, and that they have reviewed your credit scores, verified employment, verified your expenses, and verified your assets. If there are special concerns with your file, they can talk with the underwriter to gain clarification as well. Anything less than a pre-approval letter isn’t usually worth obtaining.