Here is a question that we do get from time to time.... from both Sellers & Buyers:
A Mortgage PreQualification or PreApproval - pretty much same thing... right?
..... So we asked Derek Altoonian of the Marcel Deitrich Team with WR Starkey for their explanation....
So… what’s the difference between a Pre-Approval versus a Pre-Qualification and why does it matter? In simply terms, the main difference between a pre-approval and a pre-qualification: income and asset documentation.
A pre-approval means that the loan officer has pulled credit, and collected enough information to fill out a mortgage application to form the details of the loan to purchase a new home. Additionally, a buyer has furnished paystubs, tax returns, and asset statements that show their viability to be approved for a mortgage. We have even gone so far as to underwrite the borrower without a potential address to make sure that there are no “surprises” when the borrower’s “dream home” is found.
A pre-qualification is when a loan officer pulls credit to see if the buyer has a qualifying credit score, and gathers enough information through a verbal interview with the buyer to fill out a mortgage application to see how much buying power your client has. There is often zero documentation with a pre-qualification.
We believe the Pre-Approval is, obviously, much more meaningful to sellers in today's marketplace. The more thorough analysis of the buyer’s income, assets and credit ensures the greatest chance that the pre-approved buyer will fund on the purchase.
- The Deitrich Team - 972-672-3246 - www.marceldeitrich.com - WR STARKEY MORTGAGE, LLP NMLSR#2146
Thank you to Marcel & Derek.
The "Take Away" - as a Buyer seeking every advantage in this low-inventory & competitive market, the extra work to achieve a Pre-Approval v/s a Pre-Approval may make all the difference to a savy Seller reviewing multiple offers!
- Christie Cannon