The mortgage process is an exciting time as it represents a step toward the major accomplishment of homeownership.
At the same time, it can be complex and lengthy since it’s one of the biggest financial commitments you can make. With the stakes being so high, it’s important for consumers to be aware of the distinctions between a preapproval and a prequalification.
It goes without saying that those applicants who are already equipped with a preapproval or prequalification are better positioned to be more competitive in today’s real estate market.
But, which one is ideal for you?
Mortgage lenders issue a prequalification as an option to gauge the credit worthiness of their clients. It is by no means an ironclad commitment from the lender that it will loan the money. It is, however, a good indication that the applicant could be approved for a mortgage.
The prequalification is less formal than a preapproval and provides merely an estimate of how much home an applicant may be approved for. This is based on income and budget.
A preapproval is a much more comprehensive approach to test the credit worthiness of a buyer.
When a person is preapproved for a mortgage loan, it means that the lender has carefully reviewed all the pertinent financial records that are needed to make a decision.
Upon being preapproved, the borrower has a good idea on a specific mortgage loan amount. Other details, such as the projected mortgage payment, will be included as a result of a preapproval.
This process is a bit more involved, requiring borrowers to submit extensive documentation.
The great news is that a preapproval carries a lot of weight because it shows that the buyer is ready to make an offer on a property.
Both a prequalification and preapproval are key steps in learning more about a mortgage and being approved for one.
If you’re thinking about purchasing a home in the Twin Falls area, please contact our office to learn more about this program and what you’ll need to get preapproved. We’ll work with you at every step of the way and ensure that you enter the market with the utmost confidence in yourself and what you can accomplish.