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What is the difference between prequalification and preapproval?
Buying a home whether it's your first home purchase or you’re a seasoned veteran, it’s to your advantage to get either pre-qualified or pre-approved for a loan. The difference between the two are often not fully understood and I would like to provide you with an understanding between the two so that you can enjoy your house hunting experience.
Pre-qualification in short is a quick and simple process that can be done either on the phone or at your initial meeting with a loan officer. Pre-qualification is based on housing and debt ratios. By getting pre-qualified you will have an idea of how much house you can afford and what loan program options will fit your particular situation.
Benefits to getting pre-qualified
- Getting pre-qualified for a given loan amount allows you to shop for a home with the comfort of knowing your price range.
- Once you have found the home of your dreams being pre-qualified can also speed the process of obtaining a mortgage.
- Pre-qualification gives you an advantage with agents and sellers when you submit an offer over those who aren’t as you have demonstrated that you are a determined and qualified buyer.
- Proof of pre-qualificaiton is required with the submission of the Arizona Residential Purchase Contract. A residential purchase contract is simply your offer for the home and again, prior credit approvals can expedite the closing of your loan.
On the other hand getting pre-approved to buy a home requires more detailed information from both you and outside sources which is necessary to complete your loan. Once the information has been gathered it is then submitted to an underwriter for review of all of the documentation. An underwriter checks over the figures and makes sure that all of the documentation is in order before deciding on an approval.
If the Underwriter issues an approval of your loan with additional conditions to be met, it is considered approved; however, the outstanding conditions will need to be satisfied before your loan is considered fully approved. Once the pre-approval process is complete, you will be given a letter that is typically valid for 60 days stating that you have been pre-approved and the lender is willing to give you a loan.
Want to learn more about getting started on getting pre-qualified or pre-approved? Click here to Contact Kathleen Yamauchi Real Estate Group or call 928-771-1111 today!