What's the difference between mortgage prequalification and pre approval? Which is better?

We're going to discuss the truth about getting pre-qualified versus getting a pre-approval. we're going to talk about, which is better and what should your next steps be? I'm going to focus on the real estate financing process and talk to you about the difference of pre-qualification versus pre-approval.

The truth is that pre-approval is a high-level overview of your finances, your income, and then your assets. And basically all that pre qualification really does is based on the current credit score and the income that was reported, this is how much you can get approved for.

Now, the truth about pre-qualification is you can do that yourself. You absolutely don't need a loan officer to do a prequalification. If you know what your credit score is, and you know what your income is, you can determine how much it is you qualify for. Let's move on to the truth about pre-approval now a pre-approval is a deeper dive into your finances. It's again, look at your credit, but not only that, they're going to verify your income documents and your asset documents.

So they're going to give a full review of all of the documentation needed to actually approve you for the loan. A pre-approval by its very nature of being more in-depth is far superior to a prequalification. As a matter of fact, you could completely skip pre-qualification and go straight to a pre-approval.

Now, once you get your pre-approval letter, it's not time to celebrate. Don't celebrate. Well, you can celebrate for like five seconds, but really it's time to get to work. And I'm going to go through some steps you need to take. Once you get that pre-approval letter to make sure that you can have a smooth sailing through closing.

Here's the first thing you need to do when you get your pre-approval letter. That is, read it, read the entire preapproval letter. Second thing you need to do when you get the preapproval letter is take note of the conditions on your pre-approval letter. What are conditions? Conditions are additional steps or requirements needed to get your loan fully approved and through.

An example of a condition that you may see on your pre-approval is the appraisal of the property that you're purchasing. So, once you get that pre-approval letter, you're going to read it and you're going to take note of conditions. And then the third thing you're going to do is write down any questions you have about conditions that are listed, especially if you don't fully understand what the condition means and what the lender needs to fulfill the condition. I will say that again, take note of any conditions you don't fully understand. Write them down.

Write down the questions you have so that you can discuss those conditions with the lender and be very clear about what it is you're required to do to fulfill those conditions. The last thing you need to do once you get that pre-approval letter is once you've satisfied the conditions you want to follow up with your loan officer, your loan processor, or whoever your point of contact is during that process, you want to follow up and make sure that they show the condition satisfied. Say that one more time. Once you've satisfied the conditions on your pre-approval letter, you want to follow up with the lender, the loan officer, the processor, and make sure that the conditions are showing satisfied on their end.

Okay. Now my experience has taught me that not following these steps, lead to headaches and delays in your financing. So you want to go back, review these steps and make sure you follow them. Now, with that being said, that is it for the truth about pre qualification versus pre-approval you know, that pre-approvals are far superior to pre-qualifications. So go ahead, go get that pre-approval.

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