Mortgage Pre-Qualification Vs. Pre-Approval – What’s The Difference?
Before starting you start looking at West Knoxville or Farragut homes for sale, one very key step in the process is to secure financing to purchase the home. Sitting down and talking with a loan officer will allow you to figure out how much you are able to afford and it will allow you to address any potential question you have. Oftentimes, during this process you will hear about getting pre-approved or getting pre-qualified. Oftentimes, these terms can be confused as the same thing, when they are actually not. So, what exactly is the difference between pre-approval and pre-qualification? And, what does it mean for you when it comes to buying a Farragut or West Knoxville home?
A mortgage pre-qualification is merely an estimate how much you can afford and how much a lender is willing to lend. Buyers tend to get pre-qualified at the beginning of their West Knoxville or Farragut home search. It allows buyers narrow down a price range for their home search. Generally, it should be done before you start looking at houses. After all there is nothing worse than falling in love with a house, only to realize it is out of your price range. Getting pre-qualified is a a fairly simple process, it usually involves talking with a loan officer and discussing your income, debts, assets and a potential down payment. With that information, they will be able to give you a ball park of how much you can afford and how much your monthly payment will be. When you get pre-qualified, there is no level of commitment from either you or the lender. A pre-qualification is just a helpful tool for West Knoxville and Farragut buyers to determine what price range for their home search.
In contrast, a mortgage pre-approval is a little bit more involved than pre-qualification. When you get pre-approved, a lender makes a commitment to provide you with financing and you make a commitment to use them for your loan. Generally, getting pre-approval involves some time of application fee. You provide them with all documentation for your income, assets, and debts. The will also pull your credit to pre-qualify you. With that information, they will provide you with a pre-approval letter saying how much they are willing loan you to buy a West Knoxville or Farragut home. A pre-approval, though, does not guarantee that you will get a mortgage loan, there are other things that have to be verified prior to final approval.
Are you thinking about buying a West Knoxville home this year? If there is anyway Knoxville Home Team can assist you, please let us know, you can give Rick at call at 865-696-9002 or send an email to Rick@KnoxvilleHomeTeam.Com. Kati can be contacted at 865-392-5880 or via email at Kati@KnoxvilleHomeTeam.Com.