As you prepare to apply for a mortgage, you’ll come across terms like “prequalification” and “preapproval.” It’s important to understand what these terms mean as they’ll guide your home search and help you focus on homes you can afford. When the time comes, they can also help you decide how much to offer and show the seller that you’re a serious buyer homebuyer.
What is mortgage pre-qualification?
Prequalification is an early step in your homebuying journey. When you prequalify for a home loan, you’re getting an estimate of what you might be able to borrow, based on information you provide about your finances, as well as a credit check. Prequalification is also an opportunity to learn about different mortgage options and work with your lender to identify the right fit for your needs and goals.
What is mortgage preapproval?
Preapproval is as close as you can get to confirming your creditworthiness without having a purchase contract in place. You will complete a mortgage application and the lender will verify the information you provide. They’ll also perform a credit check. If you’re pre-approved, you’ll receive a preapproval letter, which is an offer (but not a commitment) to lend you a specific amount, good for up to 90 days.
Have more questions? Give us a call at 480-500-1738 and we will put you in touch with one of the amazing lenders we work with!