Transcript: Hello, I am here to elaborate a little about the difference between Prequalified vs preapproved. Keep in mind that I am just a property manager and realtor, not a lender. If you want more information, research online or talk with your lender. The bottom line is that the lender needs to know everything about you from a financial perspective: what your credit score is, how much income you have, how much debt you have and more. They need to confirm that you have enough cash for down payment, closing costs, etc. Finally, the lenders use a formula to calculate the debt to income ratio so they know how much they can lend to you. “Pre-qualified” loans are a superficial estimate of what they think they can lend you. Lenders would ask simple questions like how much income and debt you have. Maybe they check your credit report before they determine how much they are willing to fund you with a mortgage. “Pre-approved” loans are pretty intensive. The lenders require all documentation about your financial position including paystubs, bank statements, credit card statements, car loans, student loans, Best Buy debt, your retirement savings like 401K, IRA and others. Also, they require a copy of your IRS tax returns. There are many more documents that they may require. Once they approve your application for loan, you will receive a written letter with the exact amount of loan from a lender who will fund the loan. Then, you can start working with a realtor to look for a property to buy! 🙂
