Mortgage Monday

For most individuls, the terms pre-qualified and pre-approved are very similar in definition but differ greatly when it comes to mortgage applications. When one is considering taking out a mortgage, he or she must understand the terms and conditions that each word actually means.

The first major step is the pre-qualification in which the lender will request information from the borrower. This will include the amount of annual income, debts,  payments, asset, and other financial information that is important. To understand this, the lender must examine in great detail all this data and make a decision whether or not to give a loan. This choice is majorly dependent on that information but is almost always a free process that can be done in a short amount of time.

The pre-qualification amount is strictly an estimation. A pre-qualification is not as strong a pre-approval. Pre-approval makes it mandatory to fill out an application for the mortgage as well as a fee that goes along with it. This application specifies all your financial information, credit history, and whether you are able to pay them back in a prompt period. This will then give your particular details about your loan, the rates, and how much you are charged.

After this is determined, the pre-apporval will lead  for you to write a contract in which you will pay the amount listed. This solid commitment means that there are specifications on the terms of the loan including the price. This may affect an individual’s overall decision on which house to purchase. The seller of the property will then look at the pre-approval as a means of being able to pay for the home. Although it places a limit, it acts as a means to be responsible and speeds up the house buying process.