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What is the Difference Between Pre-Approval and Pre-Qualification for a Mortgage?

Rhonda Duffy

Atlanta Real Estate Mortgage Pre-Approval

 

Before you jump into the process of buying a home, it is a smart idea to talk with your lender to learn more about the mortgage that you will qualify for. By laying the necessary groundwork in the beginning, you can make it easier to buy the home of your dreams and avoid potential issues that might pop up in the process of closing. It is important that you are talking with an experienced Atlanta real estate agent from the beginning, because your agent will be there to help every step of the way.

Pre-Approval vs. Pre-Qualification

Some home buyers might mistakenly think that pre-qualification means that they have been approved to buy a home. But, there is actually a big difference between these two terms, and it is important that you understand the difference so that you know where you are in the process of getting a mortgage.

  • Pre-Qualification: The first step in the mortgage process is to get pre-qualified, and this step is typically pretty easy for most home buyers. The lender will ask for information about your overall financial picture, such as income, debt, and assets. Using this information, the lender will evaluate your situation and let you know a general estimate for the size of mortgage that you will qualify for. Typically, this process can be done online or over the phone, and it is just an overview of your financial situation.
  • Pre-Approval: The next step is to get pre-approved for the mortgage. This process is more in-depth, because you will need to submit an official application for the mortgage along with the associated fees. An extensive credit and financial check will be completed, so you will need to provide all of the requested documentation that will be used for this investigation. During this stage, most home buyers haven’t found the exact home they are planning to buy, but they are preparing to have the financing in place when they find the right property.

Pre-approval will give you a conditional commitment from the lender, and you will have this documentation in writing. At this point, you will know the exact loan amount that you can qualify for, which means that you need to make sure that you are looking at homes priced below the level of your qualification.

Pre-Approval Advantages

Even though it might seem like a hassle to go through the pre-approval process if you haven’t found the home of your dreams, this step can actually be helpful to expedite the process when you find the right home. When you are working with a potential seller, the seller will see that you are serious about the offer because you already have financing in place. Pre-approval puts you a step closer to getting the mortgage that you will need to purchase the home.

At Duffy Realty of Atlanta, we can help you with each step of the home buying process! Contact us for more information about buying the home of your dreams: (678) 318-1700