Sellers and agents like to see that their buyers can secure the financing needed to purchase a home. That’s where pre-approval and pre-qualification come into play. But what’s the difference between the two? A valuable Expert should make sure their clients know which is which.
Our handout on pre-qualification vs. pre-approval doesn’t just explain the two, but also describes their purpose, how long they take to obtain, and other key considerations. Insights from Kevin Leibowitz of Grayton Mortgage and Robert Niyazov of R&J Capital Group add extra wisdom for buyers. Give this handout to your clients who are honing in on their perfect home and beginning to think about the financials.
PREVIEW:
Mortgage pre-qualification is an informal assessment by a mortgage professional of a buyer’s ability to obtain financing for a home. The prospective buyer usually provides the mortgage broker with basic, self-reported financial information. The broker may then issue a pre-qualification letter which can be shown to the seller or agent.
Buyers may choose pre-qualification over pre-approval when they’re just starting their search for a home, to get a sense of what kind of mortgage they could potentially secure. It’s a good way to estimate how much house you can comfortably afford.
Pre-approval is when a mortgage broker formally determines if a buyer can qualify for a mortgage of a specified value. The process is more formal than pre-qualification and involves more paperwork, such as pay stubs, tax returns, bank statements, and a credit report. All financial information will be verified. At the conclusion of the process, the buyer will receive an official pre-approval letter to provide to the seller or seller’s agent.
The mortgage broker may additionally ask for details on the specific property the buyer is looking to purchase, or similar properties. Providing a price range is also acceptable.