|
Pre-Approval or Pre-Qualification
Pre-Qualification for a loan amount means that someone, possibly even
you, calculated the anticipated maximum mortgage amount that you can afford.
This is a simple procedure and is done by calculating the percentage of
your income that a lender is likely to allow you to pay each month for
a mortgage. Even if you understand how to do this calculation, if
you are self-employed or get a large part of your income from commission
or overtime, you should ask a mortgage professional, counselor or real
estate agent to check the calculation. Pre-qualification carries
no promise that you can actually get the loan.
Pre-approval for a loan means that the lender has taken
a full application on you, has verified all the information you provided,
and has had the loan approved by an underwriter. With a true pre-approval,
you can go out and purchase a home up to a certain price and if the appraised
value of the home is at least the amount you are paying for it, you are
promised you can get the mortgage. This gives you some negotiating
power when you make your purchase offer. A seller, who receives
more than one offer at the same time, is more likely to choose the buyer
who has been pre-approved.
|
