If you’ve been searching for a new home or received a few credit cards in the mail, you’ve likely come across the terms pre-approval and pre-qualification. For first-time homebuyers, these terms are one of the most important to know, yet many homeowners confuse them with each other. A clear understanding can help you understand every advantage you have and maximize your chances of finding a home you love and enjoy for years to come, and the team at Hunters Real Estate can help break them down for you!
What it Means to Be Pre-Approved
A pre-approval is the closest anyone can get to confirming your creditworthiness without getting a contract set up. During the pre-approval process, you will complete a full mortgage application with all the additional information and documentation needed to complete the process. Then, your mortgage lender will review your information and offer a pre-approval letter of a specific amount, usually valid for about 90 days.
What It Means to Be Pre-Qualified
In contrast, being pre-qualified is a very early step in the home-buying process. It’s an estimate of the amount of money you’ll be able to borrow based on a few essential pieces of information that provide a vague financial picture. Your debt, income, and assets are used to compare you to other lenders and give the bank a rough estimate of what you can contribute. A pre-qualification usually involves little to no cost to the potential borrower.
How Long Will Each Process Take?
Because pre-approval is more thorough than pre-qualification, you can expect this process to take longer. Depending on who you turn to, you can get a pre-approval in about 7-10 days, while pre-qualifications can take as little as three minutes. Either way, you shouldn’t expect these processes to take more than two weeks to complete, giving home buyers a snapshot of their financial situation in the blink of an eye.
Is One Better Than the Other When Getting a New Home?
Is one situation better than the other? Whether you’re looking at real estate in South Philadelphia or just browsing around to get an idea of what your first home might be worth, pre-qualifications and pre-approvals both have their benefits. Contextualizing your situation will help you decide which of these options works best when looking for a new home.
Here are some of the key benefits of a pre-approval:
- You’ll be ready to make a good and accurate offer.
- Sellers will feel more comfortable and confident with you.
- You’ll have greater negotiating power during the sale.
- You’ll be much closer to closing the deal and getting your new home.
Meanwhile, the benefits of a pre-qualification are as follows:
- You’ll better understand what you can borrow and what you can do to improve your odds of mortgage approval.
- First-time home buyers will feel much more comfortable during the purchasing process.
- Sellers are more likely to move forward with pre-qualified individuals than those without them.
- Real estate agents love working with pre-qualified individuals, as it shows you’re serious about owning a new home.
Learn More About Home Loans and Start Your House Hunting Process With Hunters Real Estate
Learning about home loans on your own can be a complicated process, especially with terms like pre-qualification and approval, which can easily be confused with one another. So instead of attempting to tackle it on your own, partner with the expert real estate team at Hunters Real Estate. We’ll help you find the latest properties for sale, including single-family homes, townhomes, and commercial properties. Get pre-qualified or pre-approved for your mortgage loan with Hunters Real Estate today!