First time home buyer: What is the difference between Mortgage Pre-Qualification and Pre-Approval?

When you are buying home in Phoenix, your Real Estate Agent may ask you whether you had pre-qualified or pre-approved for mortgage. So, what’s the different between Mortgage Pre-qualification and Mortgage Pre-approved?

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What is Mortgage Pre-Qualification?

Pre-qualification is a lender’s estimate of how much you could be eligible to borrow based on information you supply. The process varies by lender, but you should expect to be asked for some basic information about your financial situation. For example, a lender might want to know about your income, your monthly bills, how much you’ve saved for a down payment and how much you want to borrow. Pre-qualification does not mean you will get the loan. Pre-qualifications are usually free.

What is Mortgage Pre-Approved?

Pre-approval usually means that the lender is ready to make you a mortgage loan based on the information and documentation you provided at the time you requested a pre-approval. The pre-approval will say how long it is valid for and may contain some other conditions for you to get the loan. Your lender may not require that you pay any fees except the cost of a credit report at this time.

Here are the information lender may required for Mortgage Pre-approval:
– 2 years Tax returns
– 2 month Bank statements all pages
– Any statement on 401k, IRA, Stock, Bonds
– Copy of your Driver’s license & Social Security card
– 2 year residential history Addresses Landlords Name and number
– Last two year employment history with Name, Address Phone position and dates
– Your last 2 pay stubs

Because it is based on more detailed information and an actual credit check, a preapproval has greater benefits than a prequalification. With a preapproval, you’ll be able to shop confidently because you have an estimate of how much you may be able to borrow, and your real estate agent will know your approximate price range to search.

Swee Ng, Realtor and Phoenix East Valley resident specializing in win-win real estate transaction through great communication and fighting for his clients’ best interest. After all, this is more than real estates, this is about your life and your dreams.

If you are looking to buy or sell your home in Phoenix AZ area, we hope you will consider us. Contact us today for complimentary consultation.

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