Pre Approval vs. Prequalification Letter
Meet Juan Santana, Loan officer with The Home Team at Freedom Mortgage.
In this blog you'll learn about the main difference's between a pre qualification and pre approval letter. More importantly you'll understand everything that is needed to go through each process.
The pre-qualification process is great for people that are considering the purchase in the future. It is a qualification based on information that you provide to the bank. You'll receive a questionnaire where you can list income and assets, the bank will run your credit to confirm that your credit qualifies before giving you a letter. If you are considering the purchase in the ing term the pre qualification process is a great way understand whether or not you are on the right track. Unfortunately in many markets the pre qualification letter is not enough the place and negotiate offers. In that case you will need a pre approval letter.
Pre Approval Letter
The pre approval process is a little more extensive and the first step that is recommended to clients who are ready to go out and view properties. Below you will find a list of the documents any reputable lender will require to take you through the process.
- Last two years of income : This would include tax returns
- Credit scores: The bank will run your credit to see what programs are available to you
- Verification of assets: This will also help determine what program is best for you
Although this is a lot of documentation, understanding where you are financially in respects to purchasing a home will help bring clarity to the entire purchase. Once you go through the pre approval process you will have a clear picture of what you can or want to afford. More importantly you will have a rough estimate of what your payment is going to be once you do close on your new home.