What’s The Difference Between Pre-Qualified and Pre-Approved Mortgages?
With all of the home buying trends and changes in the mortgage industry, it can be hard to understand if you’re pre-approved for a mortgage or if you’re pre-qualified. To make things easier, we’ve broken down the differences between these two terms and what they mean for your home buying process.
Pre-Qualified: When you apply for a loan with a lender, they will likely offer to pre-qualify you. This means that the lender has run some basic information through their system to see if they can give you an approximate interest rate. You may not know this exact number, but it will at least give you an idea of what range your budget would fall in.
Pre-Approved: If you are pre-approved for a loan, this means that the lender has looked at your entire loan application and determined that there is no reason why they can’t approve your application. They have done everything necessary to give you the best.
Pre-Qualified vs. Pre-Approved
At first glance, you might think that pre-qualified and pre-approved are one in the same. But there is a major difference between these two terms.
Pre-Qualified: When someone offers to pre-qualify you for a loan, they are giving you an approximate interest rate based on some basic information. You will not know this exact number, but it will give you an idea of what range your budget would fall in.
Pre-Approved: If you are pre-approved for a loan, this means that the lender has looked at your entire loan application and determined that there is no reason why they can’t approve your application. They have done everything necessary to give you the best.
What Are the Differences Between Pre-Qualified and Pre-Approved?
Essentially, pre-qualification is just a preliminary assessment of whether or not you would be eligible for a mortgage. It doesn’t actually mean that you are 100% approved for the loan you are requesting.
Pre-approval is when the lender has looked at your entire loan application and determined that there is no reason why they can’t approve your application. This means they have done everything necessary to give you the best rates and terms available on the market.
If you want to know what you’re really getting into before signing on with a lender, it’s best to get pre-approved first!
What are the Advantages of Being Pre-Approved?
There are a few advantages to being pre-approved for a loan.
First, once you’re pre-approved, the lender will take care of most of the paperwork. This can be a huge time saver for you.
Second, once your application is approved, the lender will issue you an offer letter that includes all of the information about your loan application and interest rate. It’s important to have this information handy when you are ready to start looking at homes so that you know what you are able to afford.
Third, if your credit score has gone down or if there are any other changes in your financial situation, it may affect whether or not you are still eligible for a mortgage. If this happens, lenders can decide to “re-evaluate” your pre-approval status and see how it would affect the terms of your loan before issuing an approval or denial decision.
Ultimately, being pre-approved is beneficial because it allows for less paperwork on both sides and gives buyers time to find their dream home without worrying about how much they can afford upfront.
What are the Disadvantages of Being Pre-Approved?
It’s common to be pre-qualified for a mortgage before you can get pre-approved. This is because of the extra time, effort, and paperwork that goes into getting pre-approved.
The disadvantages of being just pre-qualified are that this isn’t always accurate. For example, if your credit score changes or you have new information on your income, this means your loan application may not be accepted when it is reviewed again by the lender.
On the other hand, there are advantages to being pre-approved over being just pre-qualified. When you are approved for a loan, the lender has already done everything they need to give you the best rate possible on your mortgage. You also know that the lender will definitely approve your application if all your information checks out.
With all of these home buying trends happening, don’t forget to contact Sligo Mortgage about whether you’re qualified for a mortgage!
Conclusion
Home ownership is everyone’s dream. But buying a home is not for everyone, and it’s important to understand what you’re getting yourself into before you sign on the dotted line.
Are you considering buying a house? Do you want to know more about pre-qualified vs. pre-approved mortgages?
Being pre-approved is a lot like being pre-qualified. It means a lender has looked at your credit history and income, and thinks you’re eligible for a loan. But there’s one major difference between pre-approved mortgages and pre-qualified mortgages: being pre-approved means you’ve been approved for a specific mortgage, while being pre-qualified means the lender is just interested in seeing your application.
We here at Capital Mortgages look forward to assisting you with Ottawa mortgage needs and approvals. Contact us today by calling us at: 613-228-3888 or email us direct at: info@capitalmortgages.com
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