Ever hear the adage of not looking at cars or wedding dresses you can’t afford to save you from heartbreak? The same goes for home buying. It’s best to know how much you can afford before you go searching for that dream home, and even more beneficial to work with a lender that can help give you an accurate picture of your financial situation. Let’s talk about the difference between pre-approval* and pre-qualification and dive a little deeper into one of the most critical steps of the home buying process.
What is a Pre-Approval?
Pre-approval is a mortgage lender’s conditional agreement to lend a specific amount of money to a home buyer under a specified set of terms. Simply put, a pre-approval helps to give you the price range on the home you can afford.
How It Works
When you want to be pre-approved for a home, you begin by filling out a loan application. Loan applications have traditionally been done on paper, but most lenders are now offering an online application in which everything can be submitted digitally. During the application, you will enter your personal information, as well as information about your assets and income. The lender will also pull your credit. All of this information will be verified, and if all looks good, you will be pre-approved for a specific loan amount. Pre-approval doesn’t lock you into the mortgage you’re offered, but offers you a more accurate look at the loan you qualify for.
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Pre-Approval vs. Pre-Qualification
The terms pre-approval and pre-qualification can mistakenly be used interchangeably. But be careful! The two mean very different things. A pre-approval is a thorough and accurate look at your financial situation. The information submitted is detailed enough and verified to tell the lender exactly how much of a loan you can afford.
A pre-qualification takes a more shallow approach when looking at your finances. You only have to submit your debt, income, and assets; from this information, the lender is able to tell you if you qualify and how much you might be able to borrow – not as exact or accurate. It’s best to receive a pre-approval before you start home shopping!
Ready to learn more about mortgages and get pre-approved? Visit our Mortgage Resources page or Contact Us to get in touch with one of our mortgage professionals today!
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Why FBC Mortgage?
FBC Mortgage, LLC is a leader in helping home buyers with fast and simple loans. We’re dedicated to exceptional customer service and are always available when you need us most, even at night and on the weekend. We’ll help you navigate your new home purchase, and keep you updated along the way with weekly check ins, so you know you’re taken care of. That’s one of the many reasons why 95% of our clients would recommend us to their friends and family. It’s also why the nation’s top home builders and Realtors trust FBC to help their new home buyers.
Buying a home is one of the most important financial decisions you will make. Understanding mortgages and the home buying process can help make it less stressful, and so can partnering with a mortgage lender you can trust. At FBC Mortgage, LLC, we’re dedicated to helping home buyers finance their dream home.
All information presented is for educational purposes only and not intended as financial advice. FBC Mortgage, LLC is a national mortgage lender headquartered in Orlando, Florida. Specializing in residential mortgage lending, including purchase, refinance, construction, and renovation loans. See what our clients have to say. NMLS#152859 EHL ©2020.
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*“Pre-Approval” means an automated underwriting system approval (conditional approval) based upon credit information supplied by applicant and subject to FBC Mortgage, LLC’s review of loan documents. Not all applicants will be approved.
