Pre-Qualification vs. Pre-Approval

You may have heard of the terms "pre-qualification" and "pre-approved" but did you know there is a difference and that the difference is enormous?
If you are considering purchasing a home, the first and most important step is to get PRE-APPROVED with a reputable mortgage lender. The difference between pre-qualified and pre-approved is the amount of information you provide your lender and the amount of work that lender does.
When you are pre-approved for a mortgage, it means a lender has looked closely at both your credit report and your income and determined that you qualify for a loan. The lender will tell you the maximum amount of loan it will make, which loan programs you qualify for, and will discuss the interest rates it will offer for different types of loans. In most cases, the amount that you qualify for and the amount that you can really afford are different. You may be able to afford a $400,000 home but you would be eating ramen noodles and watching basic cable in that humble abode.
Just because a lender or real estate agent gives you a number you can get approved for doesn't mean you should jump into that shiny new home. There are other things to consider and I'll talk more about that next time. Need a lender? I've got a few high-quality and honest individuals that are ready and willing to help!