Buyer Tools

Many people use the terms Mortgage Pre-Qualification and Mortgage Pre-Approval interchangeably, but there is a significant difference. So, what's the difference, and why is pre-approval critical to make a competitive offer?

1. Pre-qualifying is just the first step. It gives you an idea of how large a loan you will likely qualify for based on your stated income and expenses. In a traditional market, pre-qualification was adequate proof of purchasing power when submitted with an offer to buy a home.
2. Pre-approval is the second step. It is a conditional commitment to actually grant you the mortgage. This requires you, as the borrower, to complete an official mortgage application. Next, the lender will do a credit check and verify your documents, such as W2's, bank statements, tax returns. In today's market, submitting a pre-approval letter issued from your mortgage lender is REQUIRED when submitting an offer to buy a home. Sellers often will not consider your offer without a mortgage pre-approval letter or proof of funds letter (if a cash offer) included.

If you want to get PRE-APPROVED for a mortgage, I can recommend several highly reputable, local lenders. These are professionals with whom I have worked because they get deals closed quickly and reliably. NOTE: Realtors do not receive any sort of monetary compensation from mortgage brokers or loan officers, as this would be against the law.