If you’re ready to turn your dreams of homeownership into reality, you’ve probably heard the terms “pre-qualification” and “pre-approval.” While you may be tempted to think of these as interchangeable in the home mortgage process, they are quite different. So, it’s important to understand how they differ before you get ahead of yourself in the home buying process. For educational purposes, here is an explanation of the two terms:
- Pre-qualification is considered the first step in the home buying process. This provides an estimate of what you can potentially borrow based on certain personal and financial information you provide as well as a look at your credit history.
- Pre-approval is about as close as it gets to showing lenders, you’re creditworthy without having a contract yet. The lender will verify the information provided on the mortgage application and run a credit check. If you get pre-approved, you’ll receive a letter to that effect. This is basically an offer to lend you a specified amount and is valid for 90 days. However, keep in mind that this isn’t a commitment.
How Long Does It Take to Get Pre-Qualified and Pre-Approved?
So how long do these takes? Aside from the different roles that these two plays in the home buying process, they may take different amounts of time to complete. With some lenders, you can pre-qualify online and get results within an hour or two. Pre-approval is a different story since it requires supplying additional information that is not asked for in the pre-qualifying stage. Consequently, it usually requires more time to complete. Normally, borrowers get their pre-approval letters in the mail within 10 business days. If you don’t get it by then, you can contact the lender and check.
Benefits of Mortgage Pre-approval
Mortgage pre-approvals asses your assets, credit history, debts, and income then tell you how much you can borrow. Keep in mind that just because you qualified to borrow more than what you anticipated; it doesn’t mean you should. Keep the price range within the limits of what you know you can afford. Here are 4 ways that prospective home buyers benefit from the pre-approval process:
- It gives you more time to evaluate your financing options and decide which is the best fit for you
- It increases your negotiating power because the real estate agent and the seller will take you more seriously
- Not only is the pre-approval process quicker and smoother, it’s a lot less stressful
- With the approval in place, you can close faster
For more information about the pre-qualification and pre-approval process, call Granite West Funding today at (559) 540-2275. We are here to help you get the mortgage process completed. Call us today to know more about the procedure.