So you want to know Pre-Approval Vs Approval what’s the difference?
If you are ready to make the first step in purchasing a home, and want to know what to do first? Then, this article is for you….
True, you can start your car up, drive in any area, and search for neighborhoods that you want to live in.
But, before you do. I want you to consider the price of gas right now.
Before you get your heart set on that dream home and burn gas going address to address there is something you should know first.
You need to get an Approval by your lender first. Noticed I didn’t say pre-qualification, but I said approval letter.
So what is the difference between pre-qualification and approval. Glad you asked….
What Is Pre-qualification
occurs before the loan process actually begins. This is the first step after initial contact is made with the lender.
During this process, the lender or mortgage broker gathers information about your income and debts, and makes a financial determination about how much you may be able to qualify for.
This process is normally your initial contact with the lender.
This is also where the lender will pull a credit report to see if you qualify for some of there promotional programs. (Note: Consult with your lender to find out what programs are available.)
What is Approval
goes a step further than pre-qualification. It is when you turn in all the necessary documents in to a lender.
These documents may include W2 forms, tax returns, etc. Once the Lender has the documents these documents are turned into the processing department.
The processing department prepares your documents for underwriting..
The lender will then have your Approval letter based on all the documents being turned in.. They will also let you know the maximum amount loan you are able to finance.
Once you have this approval letter you are ready to call up your local Realtor or start driving looking for homes.
Think about this for a second……
If you where to present an offer to a seller and you have an approval letter in your hands from your lender, you become a very strong candidate when it comes time to put an offer in on a home.
Also you can present your offer with confidants knowing that your lender is behind you….
It also makes the transaction go a little smoother on the lending end….
When should I get an Approved Loan Instead of a Pre-Approved Loan?
A pre-approved loan is usually offered by lending institutions to potential borrowers who they believe are creditworthy for a specific type of financing.
They can also be granted to people with high credit scores.
An approved loan guarantees the approval of the borrower’s loan application by a financial institution when proper documents are turned in
The decision to get an approved rather than a pre-approved loan depends on you.
Whether you want to know that you are approved vs pre-approval were you will still have to turn in documents to your lender.
If you can the best solution would be to get approved. When you do a full approval you are making sure that you know that you can do the deal.
Pre-Approval would only mean waiting until the loan goes thru underwriting and the process.
So this is why if all possible you want your lender to give you full approval.
How Do I Find Out My Credit Score to Qualify for a Mortgage Pre-Approval or an Approvable Loan?
If you’re looking to buy a home, it’s important to know where you stand financially.
One of the first items on your agenda needs to be checking your credit score.
Your credit score can determine whether or not you’ll qualify for a mortgage pre-approval or an approvable loan, so you must know what your current score is.
A lot of people don’t know where to start when they want to get their credit scores.
If you google “check my credit score,” this will give you plenty of options for how and where to get your scores. One of the ones you can use are
1. Credit Karma
2. Experian
You should also know that there are many types of credit scores out there, and not all of them matter when it comes time for getting approved for a loan. The key is to get an overall idea of what your credit looks like.
Once you know your credit score, shopping for a lender is easy.
Another way to view your credit is to look at the three major Credit Bureau.
If for some reason you are denied a loan. You will get this notification in the mail.
Then you can ask your loan officer why you were denied.
From there, you will go to the three credit bureaus to review your credit report.
Conclusion
I hope this article has helped answer your question.
If you have any other questions, please feel free to reach out and we will be happy to help!
Let me know if this article helped you with the decision of whether or not a pre-approved loan is right for you.
So Your Next Assignment Before You Go House Hunting:
Remember:
If you are in the DFW Metroplex Area or thinking about moving to DFW Metroplex feel free to browse my site at: http://www.sellorbuyhomefast.com/