The Difference Between Prequalification and Preapproval
Prequalified? Preapproved? Why do these terms matter to someone who wants to buy a home? Receiving a mortgage preapproval letter is a giant step in the homebuying process but is it necessarily the first step? Whether you're beginning the search for that first home or dream home, knowing the difference between prequalified and preapproved can help move things along.
Getting prequalified is the first financial step homebuyers can take when house hunting. Buyers want to know what kind of a home they can buy and prequalification helps. SimonHouses.com elicits the help of TowneBank Mortgage loan officers who prequalify buyers. Afterwards, buyers take away an idea of the price range of homes they will be able to afford. Prequalification is a fairly simplistic process and may take as little as 15 minutes to secure. Objectively, without all the variables prequalification is not as close to a done deal is a preapproval is. Our mortgage team of experienced loan officers can make financing this large purchase seem like a cakewalk.
Getting preapproved is much more thorough than getting prequalified. Walking away with that preapproval letter in hand takes more time and effort for both the loan officer and the buyer. The preapproval process dives more deeply into a buyer's financials. Credit is pulled, rental history is explored, employment is verified, debt ratio is determined and income is confirmed. Preapprovals can take up to two weeks. A preapproval is a conditional written offer from a lender extending a certain amount a buyer can borrow when purchasing a home. This preapproval letter serves as proof that you are a serious, qualified buyer who means business when you start to buy a home.
When looking to buy a home, begin by getting prequalified. When a buyer gets prequalified, he essentially gets his foot in the door of the financial side of buying a home. Then he can begin looking for homes in his price range while he gets his paperwork together to get preapproved. With a mortgage preapproval letter, serious offers can be made and home ownership is within reach.