Confused about what getting pre-qualified or pre-approved means? You're not the only one. There's a big difference between a mortgage pre-qualification, a pre-approval and an actual mortgage approval.
Getting Pre-Qualified for a Mortgage
Getting pre-qualified for a mortgage helps give you an idea of how much you might qualify to borrow. But since you have not actually applied for a loan, and the lender only has your word on your credit, income, assets and liabilities, a home loan or mortgage amount is not guaranteed. With a pre-qualification, no information has been verified. If you receive a letter from the lender, it may only state that you are likely to be approved for a mortgage.
Getting a pre-qualification can be easy and fast. At Quicken Loans, you can get an online mortgage pre-qualification in minutes.
Getting a Pre-Approved Mortgage
A pre-approval goes one step further than a pre-qualification. When getting pre-approved, you may receive a letter stating how much you qualify to borrow. Your lender will pull your credit report and find out what liabilities you have. However, not everything (namely your income and assets) is verified.
Pre-approvals don't always guarantee financing since the buyer's information has not been verified. Think of it this way: a mortgage pre-approval is like getting a pre-approval letter in the mail for a credit card. You can't go to the store and buy anything with that letter—you have to have the approved credit card. Having a firm mortgage approval is like having the actual credit card.
And unfortunately, sometimes not all buyers are completely honest or accurate when they give their financial information to a lender. It's not unusual for some buyers to inflate their income or savings. Issues like these have caused many real estate agents and home sellers to distrust pre-approval letters.
The Solution - a Power BuyerSM Approval
Power Buyer - Get more bargaining leverage than a pre-approval!
The best way to guarantee that you'll have the financing to buy the home you really want is to skip the pre-qualification and pre-approval processes. Quicken Loans offers an exclusive Power BuyerSM approval a mortgage approval* that's good for four months while you shop for a home.
With a Power BuyerSM approval, all of your information will be verified and you will know exactly how much you can spend on a house. Therefore, you won't waste time looking at homes outside of your price range.
While it's helpful to be pre-qualified or pre-approved for a home loan, it doesn't always guarantee you'll be approved for a loan. A pre approved mortgage ensures your financial information has been verified, and really puts real estate agents and home sellers at ease. At the same time, you're in control when making an offer to a seller. They'll know you're a serious buyer who's ready and able to make a deal.
If you would like to learn more about the getting approved for a home loan, call us at 800-251-9080 and talk to a Quicken Loans Home Loan Expert today.
*With a Power BuyerSM, your loan will close as long as the property gets a satisfactory title and appraisal and your financial situation remains the same.
http://www.quickenloans.com/mortgage/articles/prequalified_vs_preapproved.html?lid=240
