Are words like preapproval and prequalification being tossed at you now that you’re looking to buy a home? Do you know the difference between the two? Is there a difference? Buying a home is a major life decision and for some, it can be stressful and intimidating. At Starboard Financial, we’re here for our clients. We will be your partner on the home buying journey and make sure you are well informed throughout the process.
Often misused interchangeably, prequalification and preapproval do mean different things. To get prequalified for a loan, it’s a more simplified version. A lender will get the basics of your financial situation, income, etc., sometimes over the phone. You will then receive a general estimate of how much you might be available to purchase in a home. The key word is that it’s an estimate.
When you receive preapproval for a home loan, this means your lender has taken an official look at how much you can afford to buy. After an in-person meeting your lender will go into more details with your finances including a look at your debt, all income, and credit score. When you receive preapproval for a loan you shave off a lot of time on the back end of the purchase. This will get you into your new home that much quicker.
Another big benefit to preapproval is the time saved on searching for a home. When you know how much you can spend, you typically won’t look outside that range. So if you know you have preapproval for a $150,000 loan, you wouldn’t want to look in the $200,000 range. This can help keep expectation levels in check.
If you’d like to start on your path to prequalification or preapproval contact us today. Our team will guide you throughout so you can make the most informed decisions and ultimately get into your home as quickly as possible.