Pre-Qualified, Pre-Approved… What’s the Difference?
When you’re pre-qualified for a mortgage, a lender has simply given you a good idea of how much you may be able to finance to buy your home.
When you’ve got a pre-approved mortgage, a lender has made an actual commitment (subject to conditions such as a property valuation) to loan you money. Mortgage pre-approval should be your first step when you’re seriously looking for a home to buy.
Why get pre-approved for a mortgage?
You’ll find house-hunting is easier with the advantages of mortgage pre-approval:
- You’ll save time, seeing only homes you can afford.
- You can better manage your money, knowing your monthly payment amounts, as well as how much your down payment will be.
- Real estate agents will serve you better because they know you’re serious and ready to buy.
- When you make an offer to purchase, the seller is more likely to give it serious consideration because you have solid financial backing.
- Your pre-approved status may give you more negotiating power with a seller.
- Your mortgage rate will be locked in against increases for 120 days with Capital Mortgages, if you select a fixed rate term (and it can go lower if rates go down).
- There’s no cost to you and you’re not obligated to accept the mortgage.
Best of all, at Capital Mortgages, we’ll respond within 24 hours of receiving your request to start your online mortgage pre-approval.
What happens in the pre-approval process?
- You and your mortgage specialist will discuss your financial strategy and needs, mortgage amount, down payment, purchase price, etc.
- You’ll learn about the various available mortgage options (fixed vs. variable rate, interest terms, payment options, amortization, etc.) and discuss which of them best suit your needs.
- With your consent, you mortgage specialist will take an application, which will require you to provide details on such items as employment, income, assets, down payment (if applicable) and liabilities.
- You’ll give the lender permission to obtain a credit bureau report.
- Your mortgage specialist will advise you about the documentation (income confirmation, down payment confirmation, etc.) you’ll need to supply upon conditional approval of your mortgage. Any conditions must be met for your mortgage to be fully approved.
Be prepared for pre-approval.
You’re under no obligation when you’re pre-approved, but you should still feel comfortable with the amount and terms of your pre-approved mortgage. That’s why it’s vital that you review all your personal expenses and have some idea of your future expenses before you talk with a mortgage specialist about pre-approval.