Difference Between Prequalification and Preapproval
In this Real Estate environment sellers are asking for proof of Funds or a Prequalification Letter even before they let you in to see the home.
It is important to at the very least get a PQ letter or "Pre-qualification Letter" so that when you submit an offer to purchase a home the seller will seriously consider it, I have partnered with an excellent Mortgage Broker / Lender he is in my website my contact information is at the end of this article.
Amy and Brad immediately fell in love with the two-story with a brick patio and big backyard. They quickly made an offer and began looking for lenders. Unfortunately, they soon discovered that they couldn’t qualify for the home. They tried to find something else in their price range, but other houses paled in comparison. If only they had shopped for loans before looking at houses…
One surefire way to reduce stress during the process of home buying is to seek pre-approval, applying for a loan before finding a house. The loan agent assembles a credit package that includes a loan application, credit report, income and asset information, and supporting documentation. These documents are then submitted to prospective lenders who underwrite the file, issuing credit approval or denial.
Buyers who are pre-approved are taken more seriously than their pre-qualified counterparts. Pre-qualification is not a loan commitment from a lending institution; it is only a loan agent’s opinion that you will be able to obtain financing. Verifications are not usually made so formal approval is not issued. These days, virtually anyone can achieve pre-qual status.
Pre-approval, on the other hand, signifies that the lender has taken the application through a rigorous procedure. So, buyers with pre-approval status can basically write their own ticket.
Benefits of a Mortgage Preapproval:
1. If you make an offer on a home and then apply for a loan, you are at the lender’s mercy. He sets the interest rate and points, aware that you do not have time to shop around.
2. Understanding the breadth of your financial reach will save the time spent looking at houses you can’t afford.
3. Shopping for a loan allows you to settle on a house payment that fits your lifestyle. If you rely on your lender to tell you what you can afford, you may end up with a high mortgage payment. Most people can qualify for more than they would feel comfortable paying.
4. Having a pre-approval letter from a lender gives you an edge in a situation where multiple offers have been made on a house.
5. Preapproved buyers can generally close escrow more quickly. Once you submit your credit package, most of the legwork has already been done.
Remember, neither pre-approval nor pre-qualification are absolute loan commitments. Lenders must still assess property appraisals, verify information, and, in many cases, verify credit before funding the loan.
Usually, the lender wants some additional information from you, they refer to this as satisfying contingencies, make sue you respond to these inquiries right away, you want the Mortgage completely processed a few days before the expiration of the Mortgage Contingency usually 30 to 35 from Accepted Offer and before the Closing Date.
We have an Excellent Mortgage Broker / Lender on my team for fast Mortgage Qualification, if you don't have one yet, he has done loans for clients buying homes in Plantation, Davie, Cooper City, Fort Lauderdale, Hollywood FL and other cities.
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