Shopping for a home without being pre-qualified is like shopping in the dark. You can’t see the full picture. Getting pre-qualified helps you clearly see what’s in front of you so you can make an informed decision. You wouldn’t take a house tour with your eyes closed, would you? You shouldn’t start the home purchasing process that way, either.
Why should you get pre-qualified for a mortgage when home shopping? The reasons are many.
What’s the difference between being “pre-qualified” and “pre-approved?” According to the Consumer Finance Protection Bureau, there is not a lot of difference:
“Pre-qualification and pre-approval both refer to a letter from a lender that specifies how much the lender is willing to lend to you, up to a certain amount and based on certain assumptions. These letters provide useful information, but are not guaranteed loan offers.”
In most cases, getting pre-qualified does not include the extensive documentation that pre-approval does. Pre-qualifying is just the first step in the process. To get pre-qualified, you can self-report your income, assets and other financial data. Pre-qualification is considered a “soft inquiry” on your credit report, so it doesn’t negatively affect your score.
Pre-approval is the second step. It is a conditional commitment to actually grant you a mortgage. Pre-approval is when you provide official documentation and paperwork. Pre-approval is a “hard inquiry” on your credit report.
What if you run into problems during the pre-qualification/pre-qualification process? Here are some recommendations from the CFPB.
At Mortgage 1, we help home buyers get pre-qualified every day. Let us help you. Call (866) 532-0550 or use our Mortgage in a SNAP application today.