Looking to purchase a home in Orange County? Have you looked into getting pre-approved or pre-qualified yet? Here are some important things to keep in mind when choosing between the two since securing mortgage pre-qualification and pre-approval are important steps to the home buying process.
Pre-Approval is NOT the same as a Pre-Qualification
Many often get confused between the difference of a pre-approval and a pre-qualification and assume that they are the same, but this is where they may get ideas mixed up. A pre-approval is a statement from a lender that you qualify for a specific mortgage amount based on a review of all of your financial information meanwhile a pre-qualification is where a lender runs your credit and discusses your goals with you.
What Do You Need For Getting a Pre-Approval?
Pre-approval means the lender is confident you have the ability to make the necessary down payment as well as an income that can sufficiently cover mortgage payments, so in order to get a pre-approval, you will need:
- Income Information. Be prepared to have your pay stubs, tax returns, W-2’s, and other documents that show any sources of income from the past two years.
- Asset Information. If this applies to you, prepare to have bank account statements or any other forms of documentation that show other ways you have been given money.
- Personal Information. Remember to bring a form of identification using a driver’s license or a passport and also be prepared to provide your social security number for a credit check.
What Do You Need For Getting a Pre-Qualification?
Getting pre-qualified is an informal process where you are interviewed by a mortgage professional about your assets, income and expenses. Since this process is just to give you an idea of the price range you can afford, not much personal information is needed from you.
So which is the better option: Pre-Approval or Pre-Qualification?
This choice is up to you. Since your end goal is to give sellers the confidence to accept your offer on their home, it is your call on which process would show that the reliability and simplicity of your offer stand outs over other offers.
But many sellers often like seeing the individuals who show interest in their homes to be pre-approved since a pre-qualification really doesn’t bring you any closer to securing a mortgage. In the case that the home you are eyeing is in a very hot market, sellers may not even want to bother looking at your offer until you are pre-approved since a pre-approval may better show that you are serious in the competitive market.
Personal financing can be something difficult to execute, but it is possible. With a little planning and some thoughtful decision making, you can finally purchase your dream home. If you have any questions or need any help in regards to financing, contact the Reed Team today!
Courtesy of Cuselleration