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Difference in Pre-Qualification & Pre-Approval

Before you fall in love with a property, you need to know how much you can afford. You may have an idea of what you can afford, but your lender will be able to tell you the actual amount. Getting your pre-approval from a lender is like your golden ticket and will help make the home buying process easier and help to avoid delays.

Many people confuse pre-qualification and pre-approval. A pre-qualification is an estimate of what you can afford and a pre-approval is a conditional approval based on the proof you provide.

When you are just starting out you may want to get a pre-qualification to understand what price home you can afford. A lender can estimate this based on your income, assets and estimated credit score. When you are getting more serious about buying a home you will want to get a pre-approval.

To obtain your pre-approval you will give your lender permission to pull your credit report, you will also provide them with your recent pay stubs, W-2s and other documents they need to be able to give you a pre-approval letter.

Once the lender processes your information, they will be able to provide a pre-approval letter which will state the amount your qualify for and any conditions the loan is contingent upon.

Once you sign a purchase and sale contract, the lender will start the process of your home going through underwriting and meeting all the requirements.

To learn more about the process or to be connected with a local lender, contact us today!