Pre-Approved Mortgages vs. Pre-Qualified Mortgages

You’ve undoubtedly heard the phrase, “Don’t put the cart before the horse.”  This is true when speaking of the mortgage terms:  pre-qualified and pre-approved.  Homebuyers easily misunderstand these often used mortgage terms, but rest assured after reading this article you will be well versed on the subject.  The agents at Grand Realty want to make Pensacola, FL homebuyers more knowledgeable with every aspect of the home buying process. 

       The term pre-qualified is a lender’s basic review of the buyer’s financial situation and is conducted early in the mortgage application process.  This initial review includes such information as income, debts, and assets.  It is an estimate of the mortgage amount the homebuyer can afford and qualify for a mortgage.  After being pre-qualified, the buyer can go the next step and get pre-approved. 
    Pre-approval is a more in-depth process with the lender.  It includes completing the formal application, paying the application processing fee, and providing the lender with financial documents.  The lender will then conduct a detailed analysis of the applicant’s current financial situation and credit rating.   When the analysis has been completed, the lender will issue a letter stating the specific dollar amount of the mortgage that may be borrowed, the approximate interest rate the mortgage will be set, and the expiration date that the pre-approval is available.   There are advantages for a buyer to pursue getting a lender’s pre-approval.  Once the homebuyer knows the amount of the pre-approved mortgage, he or she will have a better idea which properties are financially within the limit and will eliminate looking at those properties that exceed the established pre-approved amount.  An offer by a pre-approved homebuyer will be at an advantage over other competing buyers who are not pre-approved.  A seller will likely consider the pre-approved buyer’s offer over others because the mortgage process has already begun. 
       One thing a potential homebuyer should be aware is that the final mortgage loan and interest rate amount ultimately depend on a complete examination of the buyer’s finances and the home’s appraisal.  Once the lender issues a loan commitment letter, the buyer has been approved for the loan.  Grand Realty has the resources to assist you in every phase
 of the home buying process.       If you have any questions about getting pre-approved for a mortgage, the Grand Realty agents are able to assist you. 
          For more information about Pensacola Realtors, Pensacola MLS, Pace FL homes for sale or Pensacola FL homes for sale, give our agetnts a call  (850) 995-3222. We would be honored to assist you will all your real estate needs. From everyone at Grand Realty thanks for your business  “You’re Almost Home.”