Now that you have created your list of amenities you want in your new home, are you ready to start searching? Well, not quite. You will need to know what price range you can afford. There are two ways to go about this: You can either get pre-qualified, or pre-approved for a mortgage. Whichever you choose, you will need to contact a dependable mortgage company. At Family Mortgage of Georgia, we offer fast, FREE pre-approvals.
You should be aware that there are some key differences between prequalification and pre-approval for a mortgage. Loan prequalification is a simple procedure. It considers very basic information regarding your financial status and comes up with an amount for which you may be eligible. This can be done exclusively on a verbal level or electronically via the Internet.
The amount you prequalify for is based solely on the information you provide. In an area like Metro Atlanta, pre-qualified buyers usually have little clout, compared to pre-approved buyers. This is because the data given during the prequalification process is not thoroughly investigated and therefore may not be reliable or accurate. A pre-approved buyer is actually approved for a loan of a certain amount, while a pre-qualified buyer has only been told that they may possibly be approved for a certain amount.
Getting pre-approved is a much more involved procedure. The lender will take all necessary information regarding your finances and perform a comprehensive analysis of your current financial situation. This will conclusively give you the exact amount that you are eligible for (depending on what type of loan you decide to get). Having pre-approval shows the seller that you have gone through an extensive financial background check and there should be no unforeseen barriers to keep you from buying the home.
It’s easy to see how being pre-approved would be more attractive to a seller than just being pre-qualified. They have the peace of mind of knowing there won’t be any ugly surprises. Pre-approval can even put you in a better negotiating position with the seller, because with you there’s a guaranteed sale of their home. A prospective buyer who only has a “prequalification” is not a guaranteed sale!