Hi, Evan Swanson here to talk to you today about the difference between a mortgage loan pre-qualification, and a mortgage loan pre-approval. The two differ based on the source of information used, and their ability to help you make an offer to buy a home.
Let’s start with source of information.
A mortgage loan pre-qualification is typically based on an initial conversation, and through that conversation we’ve collected information that’s been shared verbally about the person’s credit, their obligations, income, and money used for down payment. Through that conversation, we can deem that when it comes time for them to take out a loan, that that borrower should be able to qualify for a mortgage.
A mortgage loan pre-approval uses a source of information that is much more thorough, and therefore much more reliable. A mortgage loan pre-approval would be us collecting that information, putting it on a standardized loan application, collecting a credit report, and hopefully even collecting things like pay stubs, and W2’s to verify income, collecting assets to verify money used for down payment.
The mortgage loan pre-approval is much more thorough, and is the same process used by underwriters to actually approve loans.
Therefore, a mortgage loan pre-approval is much more reliable, and therefore a mortgage loan pre-approval is often required in order for a person to make an offer on a home, and have their offer taken seriously by a seller.
If you have questions about your ability to pre-qualify, or pre-approve, or what’s right at this time, we’d love to be a resource. Contact our office today, and set up an initial phone call. Thank you.