Pre-approval and Pre-qualification difference
In order to move next step in the process of home buying and mortgage, there are many points need to complete by buyers. All the buyers should move ahead to buy a property after he/she gets confirmation from mortgage broker regarding pre-approval or pre-qualification. As long as realtor is working on property regarding offer, buyer should never give any offer to realtor.
Term pre-qualification is when broker completes mortgage application and informs you that how much they can afford.
Term pre-approved means lender confirms in written to buyers that shows how much lender is willing to lend the money based on application and buyers credit history.
Pre qualification is only based on experience and/or knowledge of bank representatives or mortgage broker. On the other side, pre approval means the willingness of lenders to lend you money.
For example, Sams says that he is pre-qualified that means broker or bank representative has taken mortgage application and they can afford particular amount on home. Particular amount could be “XYZ”. If Sams says he has pre approval that means according to his credit history, income declaration and presented assets, lender will lend him “XYZ” amount of mortgage on stated property.
Rate hold is another term need to understand. It comes generally with pre approval application where lender can hold the rate for 120 days if you move ahead to purchase a home within 120 days, lender will offer you the same rate even rate goes up. If rate goes down, lender can offer you even lower rate whatever is in your benefit.
As mortgage advisor, I will suggest you to look for how much you can afford by pre qualified and once you know your affordability, look for pre approval before you make any offer with realtor.
If you have any doubt regarding pre-qualification, pre-approval or rate holding, you can contact me by call or write me your contact info and I will get back to you as soon as possible.