Difference Between Pre-Approved and Pre-Qualified for a Mortgage

Difference Between Pre-Approved and Pre-Qualified for a Mortgage

hello this is Audrey Whittington with
realtor.com and we're going to be talking about the complexities of the
home buying process from A to Z and we're gonna kick it off with Dara Delgato from Dara Delgato home loans and we're
gonna talk about the difference between getting pre-qualified versus
pre-approved. Dara let me start by asking you how long have you been in the
industry 16 years 16 years well I was a loan officer way back when so I know
that that's a lot of loans okay so we have a great expert with us today so
what's the difference between pre-qualified and pre-approved so a
pre-qualification is generally not supplying your documentation like your
bank statements and tax returns no W2's – No W2's – is it's getting a general feel for
what you might qualify for by just telling the loan officer okay I make
this amount I have this much in the bank and I think my credit score is around
here and then they can kind of run the numbers and get an idea of what you
qualify for but it's not going through the hole it's still good to talk to a
loan officer so really it's like I'm thinking about buying a home and I want
to make sure that I'm looking in the right amounts yeah there's somebody that
maybe isn't looking to buy right away even gotcha
okay so recommendation to people even if you're out there looking on realtor.com
you should still get pre-qualified it's helpful even if you're maybe a year out
yes okay so what's the next step I just found something and now I want to get
pre-approved what does that mean so pre-approved is is just like you know
you have your golden ticket knowing that you are ready to go and you find the
home that you want and you qualify there's not gonna be any hang-ups in
underwriting so for instance you do supply your tax returns your w-2s bank
statements everything to your loan officer and then the loan officer
calculates the qualifying income runs credit runs the loan through the
automated underwriting engine and make sure that everything is good alright so
let's talk about some of those that was a lot of steps so let's talk about that
for a minute especially credit like you know I think
a lot of people who are buying a home for the first time don't really know
what is good credit let's talk about what's good credit well
typically anything over 700 is good you know there if you're well in the 700s
you know close to 800 that's like amazing but you don't have to have AB
700 plus credit score to buy a home or to qualify there are many programs that
go down to you know 620 for instance oh okay good so there's kind of something
for everybody yeah there's there's different programs that you don't have
to have perfect credit for or you could you know have a bankruptcy and you just
have to find out which program can meet your now for the pre-approval letter
right I've given you all my documentation you've run my credit and I
think I think that it might also really quick be helpful to people is to also
understand what goes into a credit score I always tell my kids make sure you pay
your bills on time but what else like what are the kind of factors that
determine whether or not I'm gonna end up with a good credit score so paying
your credit on time your any bills you have automated payments yes keeping your
balances on your revolving credit cards low as low as possible ideally below 30%
of the credit limit and using your credit you know even if you you know use
it just a little bit you know for gas and then pay it off that's that's all
good if you had you know any negative credit occurrences bankruptcy those will
show up if you had an eviction you know those things you know can really hurt
your your credit collections things like that but paying things on time little
but and having credit I think a lot of people don't realize that you need a
credit card and maybe I mean I hate to say it like that but you do need a
credit card so really the banks are looking for the
fact that you've had some level of debt and they know you're gonna be a
responsible debtor that's a fair say but they want to see your track record of
what you've done and yeah you have to buy for credit and show a track record
good okay so then I have my pre-approval letter and I think we're gonna get into
this a little bit in one of the other series but let's touch on it for a
second what am I doing with this pre-approval letter besides the fact
that I'm on roads are common it helps me know not to over by right what else
would let what else is it helpful for so your pre-approval letter
goes to your real-estate agent and they use that pre-approval letter to submit
your offer so if you're serious about you know a home and you want to you want
to make an offer the your agent will submit that with your pre-approval
letter and and then you'll submit it and see what happens great so I need really
that pre-approval letter it's really gonna help me when I'm submitting for a
contract yes you do need that most agents or if not all agents won't show
you a home unless you have the pre-approval letter because they don't
want to waste their time they don't want to waste your time is you know you can
see buyers go out there and they want this house and they just fall in love
with it and they can visualize their whole lives and then all right they
don't qualify so you go to an open house obviously you're a realtor economy could
look all day right but really if you're going to really have a formal
appointment you're gonna you know really looking at writing a contract you really
want to have that pre-approval letter pre-approval letter be familiar with
your payment make sure you're comfortable and and everything works for
you so that was really helpful this is Audrey Whittington with realtor.com we
could see that getting the pre-approval is going to be key and I think that'll
come up in some of the other video series we're gonna be doing where we
walk you through the complexities of the home buying process thanks for joining
us thank you you

Audrey Whittington

As found on YouTube

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