What Is The Difference Between Being Prequalified And Preapproved For A Loan?
Are you wondering what is the difference between being prequalified and preapproved for a loan? Do you always get confused because they seem pretty much the same thing, right? But there is actually a fundamental difference between both.
And it is pretty simple to explain it:
When you receive a letter saying you're prequalified for a loan, it means that you POTENTIALLY could get a loan for the amount stated in the letter - assuming that all of the information they have on you (whether given directly by you or by credit report agencies) was accurate and true.
Now, when you're pre-approved, it means that you have already undergone the extensive financial background check - which includes looking at your credit report, previous tax returns and verifying your employment - and the lender is willing to give you a loan. You're APPROVED! So, they give you a letter that states such and it is usually valid for 60 days thereafter. Notwithstanding the above, you will have an accurate figure which shows the maximum amount that you are approved for.
Can you see what is the difference between being prequalified and preapproved for a loan now?
Preapproved is a done deal for a determined value should you decide to go further, while prequalified is an invitation to see how much under that specified value can you get once all your financial information is checked and your credit risk is assessed. Because of that, most home sellers prefer home buyers that have been preapproved because they know that there will not be any problems with the purchase of their home.
Some real estate agents will even tell you to first get preapproved before going out shopping because the amount you will be able to get will define the ballpark at which you will be able to play in.
Popular Real Estate Questions
Popular Real Estate Glossary Terms
When you hear a real estate agent talking about a client that's an empty nester, it means said client suffers from empty nest syndrome. But what is Empty nest syndrome? Empty nest ...
We call a concept ostensible when, at first sight, it appears to be accurate or valid. However, upon closer inspection, it proves to be a half-truth or completely false. For instance, Dale ...
Those parts of a condominium that are owned by all the unit owners. ...
Money earned or accrued during an accounting period that results in the increase in total assets. Items such as rental income. Revenues arising from the sales of real estate. The ...
To transfer a property title by deed or other instrument to another party. ...
A real estate contract whose terms have been completely satisfied. ...
Relationship between individuals or entities out of which exists a mutual interest. An example is a privity of contract among the contracting parties concerning the actions each are to take. ...
Excess of money or fair value of property received on sale or exchange over the carrying value of the property. An example is the sale of a building when the cash received exceeda its ...
Having a traditional salt box architecture with clapboard siding, the New England Colonial was enlarged for additional family members by adding extensions, often at the rear of the home. ...
Have a question or comment?
We're here to help.