Do you know the difference between being preapproved and prequalified when buying a home? And is one more important than the other in today’s market? If not, you must read on….
First of all, what does Prequalified mean?
Getting prequalified for a mortgage loan requires that you select a mortgage lender (Don’t know who to call? I have a few that I worked with for years and come highly recommended) to work with and obtain your loan. A Mortgage Pre-qualification is a promise from the lender that you’re qualified to borrow up to a certain amount of money at a specific interest rate, subject to a property appraisal and other documentation.
So what does Pre-approved mean?
Being preapproved means that you have gone through the pre-approval process with a lender. It includes filling out an application, providing financial documentation, and a credit check. A mortgage pre-approval letter is a document from a lender that states you are preapproved for a loan for up to a specific dollar amount. Read more
So to answer the question, Is one more important than the other?
Being preapproved can make the difference when you are ready to make that offer in today’s market. And unfortunately, we are starting to see a pattern of deals falling through due to financing. At what seems like the eleventh hour, several buyers are learning that the amount they were prequalified for was overestimated, and they can no longer afford the house they fell in love with and have to walk away. Being preapproved can help alleviate this type of stress.
There are a lot of moving parts to the home buying journey. If you need some help talking through this financial piece, call me at 317-625-0655. I am here!
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