Spring is in the air. Are looking to buy your first home or upgrade your current one? Understanding mortgage vocabulary will help your purchase or refinancing go more smoothly. Do you know the difference between pre-qualification and pre-approval mortgage?
Even though the terms sound similar, mortgage pre-qualification and pre-approval are two very different processes. A pre-qualification is designed only to give you an idea of the mortgage amount you might qualify for, based on information you provide without verification. Some mortgage professionals believe pre-qualification is virtually useless.
A pre-approval letter from a lender shows that you qualify for a specific mortgage amount based on an underwriter’s review of your actual (verified) financial information, such as your outstanding debt, credit history, income and assets. Your home buying journey will be easier with a pre-approval letter. Why? With clear verification that you will be able to get the loan you need, a seller of a home will take your offer more seriously.
If you want more information, Iowa State University Extension and Outreach offers a comprehensive homebuyer workshop online: A Place of Your Own.