The Difference between Pre-Qualified Ad Pre-Approved When It Comes to a Mortgage Loan

A Home Buying Article Contributed by Robert Scalia

So What's the Difference between Being Pre-Qualified and Pre-Approved When It Comes to a Mortgage Loan?

When it comes to taking out a mortgage loan, there are two catch phrases you often hear blurted on television or advertised in the Sunday newspaper that you'll need to familiarize yourself with.

Pre-qualified and pre-approved are words often used to describe a mortgage loan. They may sound very similar, but learning the crucial differences between the two is the first step in finding your way through the home buyers market.

A Mortgage Loan That Comes in One of Two Shapes and Sizes

A Pre-qualified mortgage loan is one that is designed to give you a better idea of how much you might qualify to borrow based on your stated income, assets and liabilities. This is information that is provided to you before you ever apply for a mortgage loan. Because you have not actually applied for a loan and, consequently, since none of your information has been verified, the mortgage loan amount you are quoted is in no way guaranteed.

When it comes taking out a mortgage loan, a pre-approval is often touted as being one step better than a pre-qualification. So what happens with a pre-approval? Well, lenders and other financial institutions basically will sift through your credit report in order to determine of your are eligible for the loan you are seeking. So based on your credit score and stated income, a specific loan amount or interest rate will be pre-approved.

When It Comes to Taking out a Mortgage Loan, Which Option is Better?

When it comes to taking out a mortgage loan, many banks and lenders are more than willing to come out and offer you both pre-qualified and pre-approved loans.

Many banks will only conditionally commit in writing to approving a mortgage loan if you go visit their websites and don't officially apply for a loan. This happens because your full approval will be dependent on them verifying all of your information and several other things.

But keep in mind that while both options are temporary, there are other alternatives that you might find even more appealing.

The Quicken Loans Mortgage 1st company, for example, offers a firm mortgage approval. Unlike a pre-qualification or a pre-approval, this lender will fully approve your loan amount based on your credit, income, assets and employment information. Unlike the other two options, this approval will be valid for for six months, which is in fact more than enough time to shop for a home and find the abode of your dreams.

With a Mortgage 1st, you can rest assured that your mortgage loan will close as long as the property gets a satisfactory title and appraisal. While getting pre-qualified or pre-approved for a home mortgage loan is always a good idea, it's not always the only option.

Going with a Mortgage 1st, for example, can be a great way to show the seller that you're a serious buyer that's more than capable of making a deal.