Having a mortgage loan is one of the essentials when buying a home, and the task of getting one is no cakewalk. There are many questions you will want answers to and many questions you will be asked! There is often a lot of confusion when trying to understand the difference between pre-qualified and pre-approved loans. It is important for private home loan applicants to clarify the difference, at the onset, to avoid any kind of ambiguity further down the road.
Let’s look at the differences between a Pre-Qualified and a Pre-Approved Mortgage –
Firstly and foremost – Pre-qualification does not necessitate any legal repercussion. A pre-qualification letter is granted after inspecting your credit performance, application form and other parameters. It is not a guarantee that a mortgage loan will be approved. It gives you an opportunity to gauge your financial health and the kind of loan that will be most suitable for you.
On the other hand – a pre-approved mortgage loan holds a guarantee from the underwriting department of a mortgage company. Before it is issued, there is an in-depth analysis of your documents such as tax returns, credit report, income & asset statements, etc. The pre-approved mortgage loan documentation – details the maximum value of the mortgage you will be eligible for.
Having a pre-approved mortgage loan makes you more attractive to potential sellers. The pre approval paper work establishes to a seller that you a serious purchaser. Some purchasers might be hesitant to proceed with obtaining a pre-approved mortgage loan – because of the requirement to furnish your social security number. Do not let this prevent you, from proceeding with obtaining a pre-approved mortgage loan, the advantages far outweigh the disadvantages and your social security number will be required during the purchase at some point anyway! It is worth remembering though, that a clean credit score is essential if you would like a pre-approved mortgage loan.
Drew Mortgage Associates is a leading mortgage lender in MA. They offer services that will allow you to check the pre-requisites for qualifying for a mortgage loan. They can also help you gauge the availability of funds using special calculators and they can help you choose the best mortgage for you. In short, they can help you achieve your dream of owning a house with the least amount of hassle.