Mortgage Pre-Qualification vs Pre-Approval. House hunting is the fun part. However, finding out that you can’t afford the house you have set your sights on is not. Let’s cut to the chase ― when the thought of buying a house crosses your mind, two things you need to do are get pre-qualified and pre-approved for the mortgage.
Before you rush to your nearest lender and get these checks done, take a look at your credit history. Is your credit score good? Are you in debt? Are there any negative markings on your credit statement? Will you be able to meet the mortgage requirements, as well as your personal ones, on your salary? Do you have a 20% down payment saved?
The lender will ask all these questions, and they will perform a thorough background check to make sure you are eligible for a loan.
Mortgage Pre-Qualification vs. Pre-Approval
Pre-qualifying for a home loan is about getting an estimate of the amount you can borrow from a lender. This amount is decided based on your finances and credit check. This step also allows you to get in touch with a reliable lender through your Windermere Florida realtor and explore different mortgage options.
In contrast, getting pre-approved is about confirming your creditworthiness. You don’t need to bid on a house or sign a contract for this. You need to complete an application provided by your lender. The information is verified, and your credit history is checked again to decide how big of a loan you can afford. This pre-approval letter is not a commitment for the loan but simply an estimation of the amount and is good for three months.
Information Needed for Pre-Qualification and Pre-Approval
| Pre-Qualification | Pre-Approval |
| Income | Paystub that shows your last month’s income |
| Credit check | Checking credit score and credit report |
| Bank account information | Recent bank statements |
| Desired mortgage amount and down payment amount | Desired mortgage amount and down payment amount |
| No tax information required | Signed business and personal tax returns and W-2 statements from the last two years |
Pre-Qualification and Pre-Approval Process
| Pre-Qualification | Pre-Approval | |
| Benefits | You can search for your dream house now that you know how much you can borrow. | You will be able to make an offer, confident in the knowledge that you can afford the Orlando real estate. |
| Process | Requires your basic information | Once the documents (Pay stubs, credit statements, tax papers) are submitted, you will receive the approval within ten days |
| Documentation | A small interview and a credit check | Financial details and a credit check |
Pre-qualification and pre-approval stages matter a lot because they show the seller you are ready to buy the house and are not just another person simply there wasting their time. For a potential buyer, these stages are important because knowing how much they can offer for a house allows them to search within their budget.
If you are planning to look into Orlando real estate, visit the Megan Dowdy Realty website. Get in touch with their qualified Ocoee realtor to discuss your needs and goals. For further information, call on 407-509-9279.
