What Is The Difference Between Pre-qualifying And Pre-approval?

Many people who are beginning to look for a Charlottesville, Virginia home are confused about the difference between loan pre-qualification and pre-approval.

Pre-qualification is a simple process to help determine how much money you will be elegible to borrow.  After you are pre-qualified you will  have an idea of what price range home you should be looking at.  Most real estate agents will ask if you are pre-qualified when they begin working with you.  That way they will know what price range of homes to show you.  You don't want to start out looking at homes only to find out later that you cannot afford the home that you have your heart set on. 

You may get pre-qualified over the phone.  All that is necessary is to tell a lender the amount of your income, what debts you have and how much of a down payment you can afford.  Then the lender will give you an approximate figure of what you could spend on a home.  You are not obligated to the lender.

The pre-approval process is a more formal process and involves the actual verification of funds by the lender.  You will have to provide the mortgage professional with all of the financial records necessary for applying for a loan and you will go through a preliminary approval process.  The only thing that is different from an actual loan application is that you are not supplying a sales contract for a specific property.  The advantage of obtaining pre-approval is that it gives you a definate figure of how much house you can afford.  In addition when you present an offer on a home it shows the seller that you are serious about purchasing.

Therefore before you begin looking at specific homes, it is a good idea to speak with a lender and get prequalified or pre-approved.  Make sure that the home you fall in love with is the home that you can afford.

When you are ready to start looking for the perfect Charlottesville home or Central Virginia horse farm, give me a call.  I would love to help you find your dream home.

Or perform your own search of Charlottesville homes.