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Tuesday, November 27, 2012

Prequalification vs. preapproval: What's the difference?

Seller's want to know you have the ability to obtain a loan before you enter their home and as agents, we want to ensure that the time we spend showing homes is with preapproved customers.  These two home mortgage terms often get used interchangeably, but in fact, they're very different.

  • Prequalification is an estimate of the loan amount a lender may be willing to lend based on the preliminary information provided.  A prequalification is really just a general figure to help the buyer get started shopping for a home.

  • Preapproval is more formal than a prequalification and means that a lender has tentatively committed to an amount for a buyer's loan.  It is based on a preliminary review of the buyer's credit information and provides the approximate mortgage loan amount and monthly payment for which the buyer qualifies.
As always, I can give you names of lenders who can help you with the process.  Just let me know.

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