Pre-Qualified Vs. Pre-Approved
Mortgage Approval
Many buyers mistakenly only get pre-qualified for a mortgage without understanding what a pre-qualification tells you. It is certain that most individuals want the best home their real estate dollars can buy, so all they are concerned with is how much they can borrow. But without a pre-approved mortgage application nothing is guaranteed.
All a pre-qualification establishes is how much money you may be able to borrow. A buyer should be aware that they may not actually be approved for the loan amount suggested because of various factors that are not calculated during the pre-qualifying process. These factors include your exact net income, taxes and expenses, outstanding credit balances as well as many others. Because you have not actually applied for a mortgage the financial institution only has your word to go on.
Pre-approved goes that extra step further. When getting pre-approved you may get a letter stating how much money you can borrow. Your lender will pull your credit report and find out what your financial liabilities are. However not everything is varied at that time. Assets and income will be verified when you submit the final mortgage application.
Neither option is a guarantee that your mortgage application will ultimately be accepted. The home you are purchasing, work term and stability will all factor into the final decision your mortgage company will make. If you have gotten a pre-approved application you are certainly less likely to have a problem getting your financing in order during your agreements conditional period.
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