Pre-Qualification vs Pre-Approval: What Works For You?
October 18, 2021
I’m sure you’ve heard of the terms “Pre-Qualification” and “Pre-Approval” during your homebuyer journey. It can also be confusing to have both of these terms be extremely relevant towards your first purchase. Your real estate agent might also have not properly explain the difference between the two. That’s where we come in. As a time-tested mortgage banker for over 25 years we’ve narrowed down exactly what makes each of these terms click.
Have you wondered what price range is the right one for you? What about making sure if your offer is accepted? You really don’t want to lose out on your dream home. These are two of the most commonly asked questions from first-time and experienced homebuyers alike. Well, that’s where these terms come into play. You can identify your property price range, as well as, strengthen your bargaining power by understanding the difference between these two buyer tools. Now, it’s time for us to get into the nitty gritty of these tools.
What can a Pre-Qualification Do For Me?
A Pre-Qualification provides you a “ball park” estimate of your purchase power. It’s not too specific so it leaves room for error. The Pre-Qualification is based on summary information of your income and assets. To get a Pre-Qualification you need the following: a satisfactory review of property, financial documents, and program requirements to issue final approval. This is also offered by most lenders. This all seems well and good but, you can do better for yourself. Let’s move on to the Pre-Approval.
What can a Pre-Approval Do For Me?
A Pre-Approval provides proof to real estate agents and seller you’re pre-approved for a specific loan amount. This means that once we have identified your price range and the home you want to buy is within it, you’ll be ready to put an offer down. It’s also based on verification of your income, credit and assets. This means it’s a little more airtight than a Pre-Qualification. However, it does not require a satisfactory appraisal and title review until final approval. This means we have breathing room and can offer you unparalleled speeds when getting your home.
We offer this service at no cost before you find a home. Not ever lender offers a Pre-Approval at no extra cost. Think about it. This means that all the hassle before being able to put down an offer is lessened by a considerable amount. Getting pre-approved by a lender upfront in the process gives you peace of mind, it also strengthens your position at the negotiating table, especially in a multiple offer situation.
What’s Right For You?
So, what’s right for you? Depends on how sure you are that you will be purchasing a home. We recommend a Pre-Approval. It’s more airtight and offers you more benefits than your garden variety Pre-Qualification.
Interested in learning more about becoming a more secure home buyer? The ABSM team is here to answer your home buying questions so you can get a jump on the upcoming loan changes. Secure the home of your dreams today with ABSM by receiving your free consultation online or by calling us directly at 1-833-937-2276.