Pre-qualified vs. Pre-approved
Pre-qualification is all you really need to begin with and it can take as little as 10-15 minutes over the phone to complete! Here is our top recommended lender to go there now!
This is where your loan officer has talked with you and asked the qualifying questions about your financial situation and so forth, yet hasn’t submitted it for approval. Most people want to have pinpointed the price range they know they can shop in before configuring searches. Otherwise the tendency is to get fancier and fancier and waste lots of time looking at "stuff" you find to your later dismay, you cannot afford. We want to save you the pain.
When you have an experienced mortgage broker or loan officer, they will pretty much know (educated guess for pre-qualification vs. educated approval for pre-approval) what the answer will be so, they a lot of times don’t submit things when they "already know". As a buyer you need to recognize that while this can suffice in the real estate world, most of the time, there is that added measure of surprise if you have not actually submitted accurate information about your financial situation yet and the underwriter can always change their minds (in any case).
For an explanation of why it is important to get one of these processes going before you shop go to: BE READY TO ACT.
Pre-approved means that your mortgage broker/bank has sent your financial information into Fannie Mae or Freddie Mac and received back an approval. This is an actual approval, so the information will have been as accurate as the loan officer could make it. (Now this is how we define it, but we think that it might have a different definition to different people, even in the mortgage industry. In other words, we think that it might vary as to whether it has been actually submitted and received back, depending on the relative ease the submitter thinks with that it will be no problem. That is a line the mortgage professionals may skate on- check into it with them as advised and cautioned about here).
The approval is subject to certain conditions being met. The underwriter reviews the bank statements, pay stubs, math and paperwork of your loan representative, and so forth; if all is accurate, they usually do not overturn the approved status. The "catch" may be getting all that time investment of time done by the underwriter "earlier on" vs. later, thereby making the "ruling" even tighter as to additional hoops needing to be climbed through up until and at the end- leaving some relative uncertainty in your deal. Having gotten the true pre-approval work done, nevertheless, you still have to come up with the down payment and the house has to appraise for the value of the asking price before the approval status has gained final approval.