If you’re ready to make your dream of owning a home a reality, you’ve probably already heard that you should consider getting prequalified or preapproved for a mortgage. There is a common misconception that these terms are interchangeable, but they are not the same. At one of the most fundamental levels, prequalification and preapproval are types of mortgage approvals. They refer to the actions a lender requires to validate that a homebuyer/borrower can manage a mortgage. It’s time to understand what each of those terms means and how they might help you. Let’s get started!
What is Mortgage Prequalification?
A mortgage prequalification symbolizes that a mortgage lender has collected some basic details about you, and sometimes completed a credit check, to estimate just how much home loan you can get. To prequalify for a mortgage, you’ll require to provide the lender with some info about your finances, including your income and any financial obligation you have, and general details about your bank accounts. You’ll likely require to let the lender know how much you’re intending to borrow, also, along with how much you plan to contribute toward a down payment. If you’ve been through foreclosure or bankruptcy, be prepared to be inquired about it. A mortgage lender in Massachusetts can assist you with the prequalification process in a hassle-free way!
- Borrowers need to provide some basic information
- It’s a fast process, usually takes a few minutes
- Borrowers get a good idea of their affordability
- It is less reliable than a preapproval
What is Mortgage Preapproval?
Mortgage Preapproval is a lender’s conditional approval for a mortgage in the form of a preapproval letter. It lets home sellers know that you will likely be approved for a specific amount of financing, based on the info you provided in your preapproval application. Remember that preapproval is not a 100% assurance that you’ll be given the mortgage. The terms are subject to change after you send a final, official mortgage application. The best time to get preapproved is right before you start buying a home.
- You can find out how much house you can afford before shopping for homes
- You know what down payment is needed
- You get an estimate of monthly mortgage payments
- Borrowers need to provide information such as income proof, credit score, employment details, etc.
- It’s a slow process as compared to prequalification, which usually takes 1 day to 10 days or more.
- Borrowers get an idea of affordability and a partial assurance of loan approval.
- It is considered more reliable than a prequalification and a good mortgage lender in Massachusetts can help you get the preapproval fast.
What is the main difference between Mortgage Prequalification and Preapproval?
A prequalification resembles an audition, while a preapproval is a dress rehearsal for an actual loan application. The main distinction is the level of analysis with which your information is analyzed by mortgage lenders. A prequalification is issued without verification of income, employment history, assets, and so on. It assumes the information you submitted is accurate. However, a preapproval is issued only after the lender confirms your shared information.
Leading Mortgage Lenders in Massachusetts Can Help!
Drew Mortgage Associates, one of the best Massachusetts Mortgage Companies, is at the leading edge of lending and offer different mortgage plans to fit your requirements. We can help with prequalification and preapproval of home mortgages. Our experts have the knowledge, know-how, and resources to provide you an assurance that your finances remain in order and your dream of owning a home will come to life soon. So, be it about an initial check with prequalification or researched preapproval, we are here to help. Get in touch with us today!