Do I Really Need to Get Pre-Qualified for a Loan?

When you are shopping for a home, one of your biggest questions will be “how much house can I afford?” There are various quick calculation tools online where you can punch in a few numbers like your income and debt and it will spit out how much of a loan you could get. Although these may give you an “okay” range, they are not %100 accurate.

To get a better idea of the loan amount you will qualify for, you have two options. You could get “pre-qualified” for a loan or you could get “pre-approved”. These are two different processes and will have two different affects when you find the home you want to put an offer on. It is very helpful to know the difference and benefits to getting one or both of these done before you start the process of home shopping.

Pre-qualified

The process of getting pre-qualified for a loan is actually a pretty straight forward and simple one. You can either do this over the phone with a lender or even online. You will supply information about your debt, income and any assets you may have. From this information, the lender will give you an idea of the loan amount you may qualify for.

This process is basically the first step in getting qualified for a loan and does not hold much weight when you find a house to put a contract on. Sellers like that you are pre-qualified but if there are multiple offers on a home, someone who is “pre-approved” will hold more weight than someone who is “pre-qualified”.

Getting pre-qualified is a helpful process because you can talk through loan options with a lender. You also get a good idea of the loan amount you would qualify for and it is usually a quick and free process to complete.

Pre-approval

The pre-approval process is more intense. You actually need to complete a mortgage application which usually also has an application fee.The lender will look into your credit history and do an in-depth look at your financial history. With this process, your lender will be able to give you the specific amount of which you are approved for a loan. You will also be able to get the interest rate that the loan would have.

Although, you do not have to be pre-qualified or pre-approved to start your house hunting process, having one or both of these done can really work in your favor. When you are pre-approved, it can stand out to sellers because they know you can definitely pay what you offer on the house. It can help you when you are looking for a house to know how much you can afford. This can ensure you do not waste time falling in love with a property that you cannot afford.  You are also one step closer in the process, so if your offer is accepted, you do not have to wait for the pre-approval. This helps move the process along which benefits you and the seller.

If you have questions about the pre-approval or pre-qualification process or are looking for a home in the Northern Virginia area, please give our team a call today!

Jennifer Young Homes

Keller Williams Realty

703.674.1777