The Difference Between Preapproval and Prequalification
The business of buying and selling property is a cut-throat aspect in the real estate world. You might have thought you only had to concern yourself with attaining lender approval, but suddenly you hear talk about pre-this and pre-that. This can certainly feel overwhelming; understandably, you want to be viewed as a contender and remain competitive when buying a house. Keep reading to learn the difference between preapproval and prequalification and ensure you are doing everything right.
Mortgage
If you are looking to purchase a house, you likely know what a mortgage is, but let’s go over some basics before explaining the difference between preapproval and prequalification. If you can’t afford to buy a house in total, you will need to borrow from a lender; this is where a mortgage loan comes in. A lender will provide you with the money to buy a home, but in lending these copious amounts of money, they want to ensure you are financially trustworthy and capable of paying them back. This is where preapproval and prequalification come in.
Prequalification
You might find a lender use these terms interchangeably, but they are different. Prequalification is the first step in the process of attaining a mortgage. During this step, your potential lender will overview the financial information you submitted to them and determine how much of a loan you are eligible for. This is a rough assessment and is estimated based on the information you provided, which can waver its accuracy.
Preapproval
If prequalification is a simple nod of approval, preapproval is a full-out yes. This process is where things start to delve deeper into your financial situation. Lenders will request all the information needed to instigate an all-encompassing financial and credit investigation. Moreover, as a buyer, it is mandatory that you also fill out an authorized mortgage application.
Through this more extensive process, lenders will determine your actual preapproval borrow amount, and it also allows you to get a good idea of your interest rate. In some cases, this process can be lengthy. If you are looking for private lenders in Nevada to streamline the buying process, then Streamline Mortgage is happy to help you.