Lopez Island Real Estate and Property Sales
Lopez Island Real Estate and Property Sales
Pre-Qualification vs. Pre-Approval

Pre-Approval and Pre-Qualification are not the same thing. There are important differences between the two, and each one is issued by a different person. It is important to understand the differences so you can be sure you are getting what you need from your lender.

During your financing process you will be involved with two people. One will be your Loan Officer or Banker and the other will be the Loan Underwriter. Each of these people have very different and very distinct roles in the financing process. You will work directly with your Loan Officer and will most likely never have any contact with the Loan Underwriter.

A Pre-Qualification is issued by your Loan Officer. It is a great tool for helping you determine what you can afford before you begin the home shopping process. It is based purely on verbal information provided by you and does not require pulling a credit report or providing any documentation. It is an educated estimate of how much you can afford and which programs you may qualify for. You will complete this step prior to shopping so you can focus on properties within your budget.

A Pre-Approval is a much more in depth process. It involves completing an actual mortgage application as well as supplying the lender with income and asset documentation. This will include income tax returns, bank statements, a full credit report and any other documentation required to verify your financial and credit information. Once this package is completed your Loan Officer will submit it to the Loan Underwriting department for review and approval. This process typically takes between 1 to 5 days, depending upon the lender. Once you have secured a Pre-Approval, you will receive a written conditional commitment from the lender for the loan amount.

Since Pre-Approvals are usually only valid for 60 days, you will not complete this step until you are much closer to buying. You may have identified one or more homes that are serious candidates, and decide to go ahead with Pre-Approval so you will be ready to submit an offer.

Ideally you will have your Pre-Approval completed prior to making an offer. This helps make your offer stronger because the Seller knows you are serious about purchasing, and to that end have already taken steps to secure financing.

Some Important Points to Keep in Mind:

  • A Loan Officer cannot give you a Pre-Approval, only a Pre-Qualification.
  • Pre-Qualification is an informal, informational process only and has no value in negotiations.
  • A Pre-Approval can only be issued by the lender's Underwriting Department.
  • You will receive written confirmation of your loan amount once you have obtained a Pre-Approval.

*Prequalification calculator is provided as an informational courtesy by Zillow and is not a committment to lend.
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