Pre-approval vs. Pre-qualification

June 25, 2018 By ,

Why a pre-approval gives you the advantage

Even before financing a dream home, PRM will set you up to win. With a quick and accurate pre-approval, your offer will get to the top of the pile, giving you an advantage over other, unprepared buyers. Let’s break down pre-qualifications and pre-approvals, how they’re different, and what they can do for you.

Pre-qualification

Most lenders provide pre-qualification letters, which means they ask basic questions about income and credit along with monthly debts. However, a pre-qualification isn’t a deep dive into your finances; it’s simply a ballpark figure that can help you with their house hunt. It’s important to remember that being pre-qualified for a certain amount does not mean that you are approved for that amount.

Pre-approval

Unlike pre-qualification, the pre-approval process for a home loan is a much deeper dive into your finances. In essence, it’s proof that you are both willing and capable of buying a home, and adds that extra assurance to the seller that the deal won’t fall through should they choose you.

In the pre-approval process we:

  • Collect earnings history
  • Verify credit report
  • Examine assets
  • Analyze current debt levels
  • May contact employer

This in-depth understanding of your finances gives us an accurate dollar amount of what you are approved for, and a better idea of what your interest rate will be. Although not set in stone, pre-approvals are much more accurate than a pre-qualification.

Benefits of a Pre-approval:

  • You know your real budget.
  • You gain better negotiating power.
  • We contact the listing agent on your behalf to reinforce the strength of our pre-approval letters.
  • We can even provide pre-approvals tailored to a specific property.

It is our goal to set you up for success from the beginning and give you a pre-approval you can count on. If you have any questions about pre-approvals, or how you can get one, contact us today! We look forward to being your guide through your home buying journey.

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