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Welcome to Ask an Agent. If you have any real estate questions you want answered, email us at [email protected] and we’ll feature your answer on an upcoming blog post.
Question: What is the difference between mortgage pre-approval and pre-qualification?
It’s important to understand the differences between these two processes. Pre-qualification is an informal way to see how much you may be able to borrow from a lender. When seeking pre-qualification, a lender may not access your credit score, but will make a broad estimate after talking about your income, long-term debt and how much money you have saved for a down payment. They do not commit to lending to you at any amount, but it is more of a ballpark figure of the amount you may have available to spend on a home.
Pre-approval is an important step in the homebuying process, which we explore in step two of our Home Buying Timeline Infographic. It is a lender’s actual commitment to lend to you after analyzing and verifying your financial records, including your credit report. Pre-approval gives you an actual idea of what you can afford and shows that you are a more serious buyer than those without pre-approval.
Vice President of Wisconsin Mortgage Corporation John Inzeo says, “The most important first step in acquiring home financing for your home purchase is easy — get an authentic pre-approval!” Many lenders may advertise they can pre-approve without a credit score, but these companies cannot give accurate advice without accessing your credit.
Inzeo urges buyers not to be fooled by these companies — “Whether in person or online, if a lender claims to be able to pre-approve or pre-qualify you without checking your credit report, find a new lender. If a lender claims to have accessed your credit report and won’t share that information with you (including your credit score data), find a new lender. If a lender won’t take the time to discuss your specific home buying plans but wants you to fill out some sort of online form instead, find a new lender.” A quality mortgage lender and loan officer will help explain your home financing options, so contact Wisconsin Mortgage today with any questions!
Tags: ask an agent, buying a home, Home, Home Buying, Mortgage, tips and advice, Wisconsin Mortgage Corporation
Categories: Mortgage
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