Feb

2

Pre-qualified and Pre-approved - Is there a difference?

Filed Under Brampton, Buy, Condos, Homes, Mortgages, Real Estate 

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So you’ve finally found the perfect home or condo in Brampton, and you’re eager to take the next step in buying it… until your real estate agent asks if you’ve been pre-approved yet. Wait a second, does pre-approved mean the same thing as pre-qualified? You’ve heard both terms and now you’re confused. Is there a difference?

Yes, there is!

When you first approach your bank or lending institution about arranging a mortgage for the purchase of a house, they will ask you some basic questions in order to assess your financial capacity. You’ll be asked to give approximate figures on how much money you make, what kind debts you have as well as assets you possess, and what sort of payments you are currently making. This is to get a rough idea of how much money you may be capable of borrowing for a mortgage. Based on these approximate figures you give, the bank will either tell you that you’re incapable of carrying a mortgage, or that you are indeed able to obtain a mortgage, meaning you are pre-qualified. This pre-qualification holds no value, as it is only a quick calculation based on the numbers that you’ve given.

What most people are interested in is if you’ve obtained a pre-approval yet. A pre-approval is only given after an official application is run through a lending institution and all your finances, as well as your credit, has been verified. This is the only way that you can be given an exact dollar amount of what you can spend on a house.  It’s the pre-approval that is important!

Before you even start looking at buying a new home, it’s strongly recommended that you obtain a pre-approval first. A proper pre-approval will give you peace of mind, as well as let you know exactly how much you can afford. It would be a shame if you fell in love with a house and found out afterwards that you couldn’t afford it, so get that pre-approval first!

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