Wondering whether you should get prequalified or preapproved? You may see offers everywhere for free prequalification for a mortgage. What you may not know is that prequalification really means nothing when it comes to getting a home loan. What you really need is a preapproval.
Mortgage Prequalification and Preapproval Are Not the Same
Should you get a prequalification or preapproval? With a mortgage prequalification, the lender simply asks you for some basic information like your income, credit score, and down payment. Then they crunch some numbers with an algorithm to spit out the likelihood of you being able to get a mortgage, and an idea of how much you can get.
The answer assumes you are exactly right with all of the numbers you provide, and doesn’t take into account things like your actual debt-to-income ratio or if your credit history has some troubling information in it. Best case scenario, a prequal is an estimate of how much you might be able to borrow.
This is in contrast to preapproval, which involves the lender verifying all the buyer’s information and documentation and pulling a hard credit report to determine exactly how much the borrower can afford. It also establishes the down payment and available loan programs.
Why You Need More Than a Prequalification to Get a Mortgage
Being prequalified vs. preapproved is a big difference. The majority of sellers will not accept a simple prequalification letter. Especially in today’s competitive housing market, a seller will want a full preapproval letter that specifies whether the buyer’s credit check, income, and assets have all been verified and meet the lender’s requirements.
Even if you can’t fill out everything at once, submit a mortgage application. A loan officer will contact you for further clarification. To make progress, you’ll want to provide the absolute best contact information with your application. The mortgage process requires constant two-way communication. You’ll need to provide specific financial information and documentation like bank statements and tax returns.
How Long Does Preapproval Take?
Most preapprovals take no more than three business days, unless your specific situation is very complicated. Your lender will send you a pre-approval letter, which you can then use to prove to real estate sellers that you are a serious buyer.
It’s best to get a letter that states a preapproved loan amount at the top of your target price range. With the preapproval letter from your lender in hand you can start your home search and make an offer as soon as you find a house.
Now is a great time for looking into getting preapproved to buy a home. You can use our free Instant Rate Quote tool and Rate Tracker to find out how much you could be saving every month or over the life of your loan.
Mortgage Loans for the Pacific Northwest
Based in Bellevue, WA, Sammamish Mortgage has been in business since 1995, and we proudly serve customers in the Pacific Northwest region. Currently, we serve customers who are looking for homes in WA, ID, CO, CA and OR. If you’re currently in the market for a home in one of these states, or you’re thinking about buying a home, we’d love to hear from you. Our team of mortgage professionals has a detailed knowledge of the real estate markets of the Pacific Northwest and is able to help customers navigate these markets. View our Mortgage Loan Programs InfoGraphic!
Reach Out to Sammamish Mortgage Today
If you’re either looking or thinking about buying a home in WA, ID, CO, CA or OR, reach out to Sammamish Mortgage today. No matter what stage of the process you’re in, we can provide valuable information which can help you. Contact Us today to learn more, or View Rates to get a sense of what current mortgage rates look like. You can also get a Rate Quote personalized to your situation, or Apply Now to jump start the application procedure.