If you're considering the purchase of a new home, you may be concerned with the issue of finance. Attaining the right mortgage is a key step in the home buying process, but it doesn't have to be a stress-inducing one. Most lenders offer prequalification, pre-approval or both to help you know where you stand. What is the DIFFERENCE? Let me explain.
The difference between prequalification and preapproval is as follows:
- Prequalification: Prequalification is a preliminary estimate of how much you can afford to pay for a home based on information you provide. Because credit and employment information aren't validated for prequalification, it can only be considered a rough idea of a monthly mortgage payment and loan size. This can be a useful guide as you begin the home buying process, however.
- Preapproval: Preapproval is a written commitment from a lender to finance your home purchase up to a set amount. This indicates that the lender has taken a close look into your financial history and has agreed to lend you a specific amount of money, reliant on certain details like a finalized sales contract and professional inspection. Pre-approval indicates to sellers that you are a serious homebuyer.
Regardless of which option you utilize, or even if you take both steps, you'll be able to shop with much more confidence. Infact in Wocester county, many sellers are requiring them with the offer. Many cases seller won't even show the houses if the buyer is not pre approved or Pre Qualified.
Pam Crawford, ABR,e-PRO®,CRS,CDPE,LMC
Owner, REALTOR®, Managing Partner, MBA, BSBA
RE/MAX Professional Associates
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