Pre Approval vs Pre Qualification And Why 1 Might Not Be Helping You... 

...there is a decided difference between the 2 and you need to know what that is

A Pre Qualification letter is a rough estimate of what you can qualify for

based on limited information provided to a lender:

• that may/may not have verified a credit report or seen any financial documents
• it most definitely has not been reviewed and approved by an underwriter
• in many ways, it may not be "worth the paper that its printed on"

and a savvy listing agent will know what questions to ask the lender

to see if their seller should even consider this buyers offer

A pre approval is typically provided after:

• the lender has reviewed the credit report
• reviewed the income and asset documents
• calculated the debt to income ratio
• prepared an application package for underwriter review
• received any stipulations needed for final underwriting approval

It quickly becomes very clear which is more attractive to a home seller

but that doesn't mean that a buyer should always choose to get pre approved

especially if they are in the very early stages of the home buying process

a pre qualification letter may be sufficient to get started

keep in mind that limiting hard inquiries

will be important to keep your credit scores as high as possible

and that when applying for a mortgage

all inquiries during a 45 day rate shopping window only count as 1 inquiry

pro tip: its rarely a good idea to make big purchases such as a new car

when you are also trying to buy a home where you will need a mortgage

its also a good idea to avoid applying for a bunch of credit cards while holiday shopping

tune in to today's show for a whole bucket full of tips to increase your scores

and give yourself the maximum opportunity for great rates and worry free approvals