Many people confuse these two terms or believe that they are relatively the same thing, but that is definitely not the case. Actually, the difference between getting pre-approved for a Duluth mortgage and getting pre-qualified for one is quite significant and not knowing the difference could mean setting yourself up for failure when it comes time to actually apply for your mortgage loan.
The process of getting pre-qualified for a mortgage is fairly simple. Because your finances are only briefly reviewed, it doesn’t involve very many steps or very much paperwork and can often be done within a few minutes. This small glimpse into your current financial situation is what a pre-qualification decision is based on.
As you can imagine, the process of getting pre-qualified doesn’t really show much about your financial readiness or your expected ability to be able to pay back your mortgage loan and it does not guarantee you will be approved for the mortgage you will be applying for later on.
The process of getting pre-approved, on the other hand, is almost just as in-depth as the process to apply for your mortgage itself. In order to be pre-approved for a loan, you must provide financial documentation and an in-depth look into your credit history and your current credit score and financial situation will be conducted.
This process takes a much longer time and involves many more steps than the process of getting pre-qualified. Because of this, a pre-approval will hold much more weight with financial and real estate professionals as you are hunting for the perfect home to purchase.
A pre-approval shows you exactly what loan options you are likely to be approved for, giving you a much more realistic price range to use when you are shopping around for a new home. Pre-approvals can also be used as a display of your financial readiness to purchase a home and are taken very seriously by buyers and their agents during price negotiations once you find the home you want to buy.
If you are interested in getting pre-approved for your mortgage or have questions about how the process works, give me a call today! I am happy to walk you through the process and to answer any questions you may have along the way!