With interest rates as low as they are, now is the perfect time to buy a home. But before you begin the homebuying process, it is important to get your finances organized and understand what is expected of you as a new homebuyer. This includes figuring out whether you should get pre-qualified or pre-approved for a home loan. So, to help provide some insight, your local Green Cove Springs contractor with A&M Home Builders has listed the key differences between getting pre-qualified and getting pre-approved.
A pre-qualification letter is when a mortgage lender briefly reviews your financial documentation so they can give you a basic idea of what mortgages might be the best option for you. A pre-qualification does not include a credit check, which means your lender cannot exactly tell you what your debt-to-income ratio is, which is important when applying for a home loan. Basically, getting pre-qualified is the first step before getting pre-approved and it can even get done online.
Getting pre-approved for a home loan is a far more in-depth process than getting pre-qualified. With a pre-approval, your lender will thoroughly review all your financial documentation such as your current income and all your debt and assets. They will also run a credit check on your current financial situation so they can accurately tell you what your debt-to-income ratio is. Once your finances have been reviewed, you will find out what exactly your affordability is. Knowing what you can pay for a home will help make the home buying process easier and it will help you save time by avoiding homes outside of your budget.
Once you are pre-approved, you will also be able to work with a real estate agent. Most agents will not work with a buyer if they have not been pre-approved so be sure and speak with your lender first before you start looking at houses.
If you would like to receive more information on the difference between getting pre-qualified and pre-approved or if you are ready to purchase your dream home, then please contact your local Green Cove Springs contractors with A&M Home Builders at 904.955.1758 or email Joshua@amhomebuilders.com.