The NWM Blog
Written by Northwest Mortgage
Published on Fri, Jun 12, 2020, Last Updated on Sun, Nov 1, 2020
Pre-qualified Mortgage Loan
Pre-qualified mortgage loans involve your lender estimating the amount you can borrow based on your debit, credit, income, and assets whereas other lenders perform a credit check to determine the amount to lend to you. A pre-qualified loan prepares you financially to buy a home and introduces you to a wide range of mortgage loans.
Pre-approval Mortgage Loan
Pre-approval mortgage loans involve your lender estimating the amount you can borrow based on your financial history and stability. The lender will confirm your employment status, debts, income, and assets. They’ll also perform a credit check.
You’ll need to provide the lender your current pay stub, W2s form, your complete financial expenses, a summary of all the assets you own, and a copy of your home insurance policy and mortgage statement. If you meet all the requirements, your lender will approve your request for a pre-approval mortgage plan. The pre-approval letter states the type of mortgage and loan amount approved by the lender along with other conditions.
When you’re searching for a home, you can show the pre-approval letter to sellers and their real estate agent when you make an offer on the home. Even though a pre-approval letter isn’t a guarantee that you’ll get the house, it does give you leverage over other homebuyers in the market, as it depicts you as a serious buyer and increases the chances of the seller accepting your offer.
Which Mortgage Loan is Better?
In the fight between a pre-qualified mortgage loan and a pre-approval mortgage loan, a pre-approval mortgage loan is the clear winner. A pre-qualified loan estimates how much money you can spend on a property whereas a pre-approval loan offers you a decisive answer, providing you with the loan amount and its terms and conditions. The biggest benefit you get with a pre-approval loan is that the lender has approved your document for the type of loan you want and have given you around three months to buy a home.
Common Questions Asked about Pre-qualified and Pre-approval Mortgage Loans
|Do you need to complete a mortgage application?||No||Yes|
|Do you have to pay an application fee?||No||Maybe|
|Will the lender perform a credit history check?||No||Yes|
|Will the lender give you a loan after reviewing your current financial situation?||No||Yes|
|Does the loan need an estimate of your down payment amount?||No||Yes|
|Will the lender provide you with an estimated loan amount?||Yes||No|
|Will the lender provide you with a specific loan amount?||No||Yes|
|Will the lender provide you with information on interest rates?||No||Yes|
Which Mortgage Loan You Should Choose?
Pre-qualified and Pre-approval Mortgage Loans
Are you actively looking for a home to buy? Before you give your offer, you need to secure a mortgage loan, which means you need to know how much you can afford beforehand. The loan that comes out at the top is the pre-approval mortgage loan. If you’re looking for a mortgage loan, contact Northwest Mortgage for a pre-approval mortgage loan.