Many home buyers know that pre-qualification and pre-approval are necessary steps in the home buying process, but not many understand how they differ, or when each action is required.
To help, we’ve broken down the process of each, and what – you as a home buyer – will need to provide.
What is pre-qualification?
Pre-qualification is an essential first step in the homebuying process. It tells you how much money you can borrow, based on your current finances and credit score, and gives you insight into your mortgage options, allowing your lender to better identify your unique needs and goals.
What do you need to provide for pre-qualification?
- Income information
- Credit check
- Information about bank accounts
- Down payment amount and desired mortgage amount
What is pre-approval?
Pre-approval is a much more in-depth process that requires more information and likewise carries more weight. This process requires you to complete a mortgage application and requires your lender to perform a credit check. Keep in mind that this process requires a detailed examination of your finances, so be prepared to answer unexpected questions.
The benefit of getting pre-approved is that it shows your seriousness as a homebuyer and your ability to secure a mortgage. Once you receive your pre-approval letter, it is valid for 90 days.
What do you need to provide for pre-approval?
- Copy of pay stubs showing your income for the previous 30 days
- Credit check
- Bank account information or two of your most recent bank statements
- Down payment amount and desired mortgage amount
- W-2 statements
- Personal and business tax returns from the past 2 years
Are you looking to get pre-qualified or pre-approved for a mortgage loan? Contact a VanDyk Loan Originator by calling 888-482-6395 today!
