Let’s talk about the difference between a pre-qualification and a pre-approval. With a pre-qualification, the lender is just doing the very basics of making sure you’re qualified. They’re going to pull a copy of your credit report, make sure your credit score meets guidelines, and then they’re going to get your information as far as how much you make, what your monthly income is, and make sure your debt-to-income ratio meets the minimum qualifications.
The problem with this is there are a lot of other factors that go into approving a borrower. So even though you may look good for the guidelines, it doesn’t necessarily mean you’ll get the approval.
What Is a Full Pre-Approval?
The other option you have is a full pre-approval. It’s the same steps as before, except for now the lender is going to collect all your documents, take all the information, and run it through an automated approval system. That system will take a look at everything, review it, and let us know if you’re good to go.
It’s important to do a pre-approval when looking to purchase a house because there are a lot of different things that could come up during the process that could cause issues or potentially cause you to be declined. If your lender is collecting all the documents, reviewing everything, and doing a thorough pre-approval up front, then you have less of a possibility of one of these things happening.
So be sure that if you’re out there looking for houses, your lender did a full pre-approval, not just a pre-qualification.
