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Pre-Qualified vs Pre-Approval – What’s the Difference? by Tommi Edwards

 

You’ve been thinking about buying a house. You go to check the mail one day and notice that there is a letter from a bank stating that you’ve been pre-qualified for a mortgage up to $300,000. Now, you feel more ready than ever.  But hold it right there….
While a pre-qualification may give you some insight as to what your purchase power is, it holds very little weight.  This is due to the fact that pre-qualifications rarely include document verification.  This is an important key difference between a pre-qualification and pre-approval.
A pre-approval requires a certain degree of involvement from a lender.  Typically, a prospective home buyer will meet with a loan officer.  At the time of the meeting, the lender does an extensive review of an individual’s personal financial documents and credit history before being able to determine the loan amount to be approved.
It is customary for realtors to encourage anyone who is seriously looking to buy real estate, to first meet with a lender.  Knowing the pre-approval amount allows the real estate agent to successfully perform his or her role as he or she works towards finding the perfect home for his or her client!
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