Blog
Friday
17
MAY
2013
Pre-Approval Versus Pre-Qualification
The first and most important decision that a first time home buyer can make is to get pre-approved to purchase.
A mortgage pre-approval is different than a simple pre-qualification. Sometimes even real estate agents are confused by the terms, so it’s no wonder that home buyers are too. Although related, the two terms each signify a different level of approval from a lender.
“Pre-Qualified”
You can be “pre-qualified” by a lender, an agent or by yourself. The term simply means that someone has taken a general look at your income and expenses and plugged them into a debt-to-income ratio formula. Loan pre-qualification does not include an analysis of your credit report or an in-depth look at your potential to buy a home. It does not require you to provide proof of income, proof of down payment or closing costs; or provide you with any commitment for financing.
Bottom line: Pre-qualifying yourself before you start looking for a home will give you a general idea of the price range you can afford. It will not nail-down an interest rate for you, and that factor and others will affect the monthly payments a lender will allow you to carry.
Pre-Approval
A Mortgage Professional will take the steps necessary to obtain a mortgage pre-approval that will allow you to shop for your new home with confidence.
When you are pre-approved, it means a lender has looked closely at both your credit report and your income and has provided a written confirmation of your mortgage pre-approval, an interest rate hold (up to 120 days), subject to CMHC approval or a satisfactory appraisal of the property.
Bottom line: You can go shopping for a home with confidence about your buying power.
Contact the trusted professionals at VERICO One Link Mortgage & Financial today!