Not too many buyers understand this, but did you know there's a difference between being prequalified and preapproved for a mortgage loan? Understanding this distinction can make a difference in whether you get the home you want or not, in some cases. You'll have a distinct advantage over other buyers if you understand the difference and get your loan docs in order before shopping for a home.
Understanding preapproval
You are pre-approved when you have actually applied for a mortgage, received your credit report, filled out your application, etc. Employment and income have been verified, making a seller more confident in your ability to close on the home. This is the ideal situation.
If you want the smoothest possible home-buying experience, I recommend that you spend some time getting pre-approved, rather than just prequalified. Please give me a call if you'd like more help on this subject.
Understading prequalification
You are pre-qualified for a mortgage when you get a letter from a lender saying that you are qualified to take out a mortgage loan. This is helpful, but is less meaningful than a preapproval, because the lender is simply saying that, on paper, you are qualified. It is not verified, and you have not filled out all of the necessary forms at that point to know whether you are approved.
Which should you get from your lender?
The best choice is to get preapproved for a loan. With a preapproval in hand, you'll have much more negotiating leverage because the seller will know you're serious and ready to close on the loan.
