Many assume a PRE-QUALIFICATION is the same or as good as a PRE-APPROVAL. This is a mortgage myth.
Fact: A pre-qualification means a lender has verbally taken your information and calculated some payments to see how much of a mortgage you would qualify for. This is merely a skin and bones approach to see if a borrower may be in line to obtain a mortgage. However, no merit will be given to a Pre-Qualification when submitting an offer to purchase a home.
A Pre-Approval is much different and much stronger. My pre-approval means, that credit has been pulled, income, assets, and job history has been verified, and any debts reporting on your credit report have been taken into consideration. Then, the loan has been submitted to a minimum of an (AUS) Automated Underwritten System and received an approve/eligible recommendation.
Remember Real Estate Agents have relationships with Lenders. A Pre-Approval from a local lender with years of experience, along with an outstanding track record for strong pre-approvals can go a long way when submitting your offer to purchase a home.
Keep an eye out for our next ‘Monday’s Mortgage Myth.’ I will give the facts vs. the fiction of our industry’s frequently asked questions. Our goal in providing this information is to increase homebuyer education and assist industry professionals in mastering the real estate craft.