
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.