You can either be “pre-qualified” for a mortgage, or “pre-approved.” They sound similar, but they’re actually very different. Let’s make sure you understand the difference and how to leverage that difference to make a stronger offer. Pre-Qualified Pre-qualification for a mortgage is an informal evaluation of your financial situation that ends with an estimate of how much you can borrow. It requires very little paperwork … but it also carries very little weight with sellers. Pre-Approved Pre-approval for a mortgage is a longer process with more paperwork. You will have to submit tax returns, proof of income, supporting documentation, agreement to have your credit pulled ... it takes a little more effort. But at the end of the process, you get a pre- approval letter — an official statement from the lender of how much they are willing to lend you and at what terms. Sellers take pre-approval much more seriously because a lender has actually agreed, in writing, to lend you money and stated exactly how much.
5 · 2023 Buyer Guide
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