While shopping for a home, you may hear the words “pre-qualification” and “pre-approval” mentioned throughout the mortgage process. These two terms are very important to securing a home loan and purchasing your new house.

What is Pre-Qualification?

Pre-qualification is one of the initial steps in your home buying journey, usually done prior to beginning the home-buying process. Pre-qualifying for a loan means that you are getting an estimate of what you are able to borrow. This number is based on information you provide regarding your finances and credit score. Pre-qualification allows you to learn about different mortgage options and lets you go over your needs and goals with your lender.

What Is Mortgage Pre-Approval?

Mortgage pre-approval is as close as you can get to confirming your credit and financial stability without having a contract in place. Once you complete a mortgage application, your lender will verify the information you provide and conduct a credit check. If you are pre-approved, you will receive a pre-approval letter which is an offer to lend you a certain amount of money for the purchase of a home. This offer is good for 90 days.

How Long Do These Steps Take?

Pre-qualification and pre-approval can take different amounts of time, but patience is key with these steps since they are crucial to the mortgage process. Pre-qualification is a fairly quick process that can usually be done online. The results from this process are usually available from a couple hours to a couple days. Mortgage pre-approval will take longer as this step requires more information from the borrower which takes longer to verify.

What Information Is Needed for These Steps?

Pre-qualification:

• Income
• Credit check
• Basic bank account information
• Down payment amount
• Desired mortgage amount

Pre-approval:

• Copies of pay stubs that show 30 days of income
• Credit check
• Bank account numbers or recent pay statements
• Down payment amount
• Desired mortgage amount
• W-2 statements
• Tax returns from past two years

Platinum Pre-approval

For those who qualify, AnnieMac will provide certified approval before a property to be purchased is even selected, all while requiring minimal documentation.

In Conclusion

Both pre-qualification and pre-approval are important steps in the mortgage process. Pre-qualification is a great way to get an estimate of how much you can afford, and pre-approval takes it one step further by verifying your financial information to get a more accurate mortgage amount. Getting approved early in your home search will help you decide on your budget and how much you are able to afford on a home. Contact AnnieMac Home Mortgage today to get the mortgage process started.