Are You Pre-Qualified or Pre-Approved? Know the Difference
The majority of Stockton homebuyers have to obtain a mortgage in order to purchase a house. If you have cash to buy your Stockton house, you are one of the lucky ones and this information doesn’t apply to you. However, if you are part of the majority, you will be going through the process of obtaining a mortgage.
You are unable to apply for a mortgage until you have an offer accepted on a house and you know what property you are trying to buy. But there are a few things that you can do first to keep the process moving along as you go: getting pre-qualified and getting pre-approved.
What does pre-qualified mean?
Getting pre-qualified before starting a Stockton home search is a good idea for any buyers who have no idea if they can be approved for a mortgage or how much they can afford. However, being pre-qualified is not guaranteed and doesn’t hold much meaning.
Your lender will talk to you about your financial situation and tell you an approximation of what they think you could be approved for. They are not looking at your financial documents and just helping to determine if you are creditworthy enough to be approved for a mortgage.
Stockton sellers do not care if you have been pre-qualified for a certain amount because it holds no real meaning. Once you go through the process with your lender, your next step is to either wait to purchase a house until you have turned around your financial situation or get pre-approved for a mortgage.
What is pre-approval?
When you get pre-approved, you will supply the lender with things like a credit report, bank statements, paystubs and obligations. They will review all of the information and provide you with a statement letter staying how much of a mortgage you actually qualify for. They are saying at that moment in time you would be approved for that dollar amount.
Being pre-approved helps the seller to know that not only you are a serious buyer, but that you can afford to buy their house. Getting pre-approved is basically going through the approval process before you have a house that you want to buy.
As long as you have an offer accepted before your pre-approval expires, your actual approval will only be waiting on the appraisal of the house that you make an offer on. This can go a long way in getting your offer accepted over others in the case that the seller ends up with multiple offers.
Remember that getting pre-approved is actually better than being pre-qualified. There is a big difference between the two. Some Stockton buyers make the mistake of thinking that they are pre-approved when they are really only pre-qualified.
This will help to speed up the process of being approved once you are ready. But you have to make sure you are actually pre-approved. This will help you get the best chance of buying the house that you want.