What is the difference between preapproved and prequalified?

Pre-qualified When a homebuyer is prequalified, the lender has been provided with basic information to determine which loan program the home- buyer may qualify for. A Pre-qualification letter typically means a lender has taken a preliminary loan application based on verbal information and pulled your credit. A quick analysis may have been done to see if you meet the required ratios for the loan program you are approved for; however, documentation has not been analyzed or reviewed by an underwriter. Pre-approved When a homebuyer is preapproved, the lender has gone through a more in depth process to collect and verify assets, income, and other important factors regarding the loan program. Most often, your lender has obtained an “automated approval “ through one of the many Government Sponsored Enterprises (GSE’s) like Fannie Mae or Freddie Mac. (FHA, VA loans also utilize these automated underwriting engines for approval purposes) Most real estate agents will consider you a more “bona fide” buyer if you have taken the initiative to get preapproved opposed to just prequalified. It may make the difference when competing for a property and getting your contract accepted over another possible buyer. Getting pre-APPROVED is a much more in detailed process than getting pre-QUALIFIED. After you get pre-approved with Residential Mortgage Solutions, you’re one step closer to finding your dream home.
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