Prequalification and Pre-approval: Take Your Lender from Tinder Date to Soulmate
If you’re looking to buy a property, you might come across the terms pre-qualification and pre-approval. Much like swiping through Tinder, you have to get informed before making the right decision, and both of these processes contribute towards a more informed, well-thought-out decision…unlike that person who ghosted you let’s not even go there. It's time to dive into pre-qualification and pre-approval and take a look at the differences between the two. You'll be able to figure out whether you’re going to have a life-long commitment or a one-night stand.
Searching and swiping: where’s the most attractive option?
Before finding ‘the one,’ you’ve got to look around and weigh up your options. When you work with a mortgage broker, you’ll be hunting out the perfect lender who’s going to give you the best date of your life. A broker can give you 50+ options, and you’ll be swiping left or right to find the lender who will match your mortgage situation.
Prequalification: the not-so-serious dating phase.
If you want a general idea of what a lender is willing to give, you can get pre-qualified. Just like you would on a date, you get to tell a lender about yourself; give them the bigger picture alongside any goals or needs. In return, they give you an estimate on what they might be able to give you.
It’s usually a quick process done via phone or email, and your date pays the bill too! There’s no pressure or commitment, so if you just don’t like the way the lender chews their food, you don’t have to go out with them again.
Pre-approval: getting engaged and planning the big day.
Once you’ve dated around and found a lender you think you should settle down with, it’s time to get pre-approved. You’re much more involved in this step, and the lender’s going to give you an answer to the big question. To get pre-approved, you need to fill out an official mortgage application and give documentation that allows an extensive credit check and background check. The lender then comes back and hopefully says YES, you can borrow the amount needed. After that, it’s marriage, baby!
Live offers and ultimate commitments: a marriage.
Now that you're pre-approved and ready to buy, you’ll experience the joy of waiting at the altar! Your lender's next step is to look at the property you want to buy and complete an appraisal. After this, they’ll let you know if they're willing to lend on it. If they are, then the rings are exchanged, and you get your lifetime commitment! Just remember, you have a better chance of getting that all-important 'I do' if you choose a house that isn’t falling apart or has unusual attributes.
What You Need to Know
Getting pre-qualified and pre-approved is important. If you want to form a price range, pre-qualification will give you a good idea of how much you can borrow. If you want to show that you’re super-serious about buying, pre-approval is your essential key. A seller is more likely to negotiate with a pre-approved buyer, and in this shark tank of a market, it’s worth doing all you can.
If you want a lender match made in heaven, or you’re ready for some pre-approval commitment, drop us a message and we’ll get our resident Cupid on the case!
-Kyle Green
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