Pre-qualification vs. Pre-approval When Buying a Jersey Shore Home

Although the terms pre-qualification and pre-approval are often used interchangeably, the two differ greatly in the process involved in obtaining them and in the benefits they provide when buying a Jersey Shore home. Here’s what you need to know about each of them:

Pre-qualification:

This is a lender’s informal way of estimating how much you may be able to borrow. It is based on the information you provide (often by phone), none of which needs to be verified or documented. Since a letter of pre-qualification gives you an idea of how much house and the amount of mortgage payments you can afford, the best time to get pre-qualified is as soon as you decide you want to buy a Jersey Shore home.

You supply to the lender unverified information about your income, assets, debts, and possible amount of a down payment. There is no cost involved in obtaining pre-qualification, and there is no commitment for either party. Understand, however, that a letter of pre-qualification does not mean you will get a loan; it is simply a ballpark figure of the amount you can afford to spend on your Jersey Shore home and an indication that you might qualify for a mortgage in that amount.

Here you can get an informal and quick estimate of your pre-qualification or for a more in-depth analysis.

Pre-Approval:

This designation is a firmer commitment on the part of the lender and requires a more detailed and formal process which includes a credit check and employment verification. You will need to provide W2’s, pay stubs (tax returns if you are self-employed), and bank and investment statements to verify your assets.

While this process is more detailed and complex, it is definitely worth your time and effort! Not only does it allow you to shop for Jersey Shore homes with more financial confidence, pre-approval also shortens the actual loan application process and often allows for quicker settlement. In addition, sellers appreciate the fact that pre-approved house hunters are serious about buying their property and that financing should not be a problem.

In Summary:

Pre-qualification:

1. Informal collection of data

2. No documentation required

3. Verification not done by lender

4. An estimate of the amount you might be able to borrow.

5. Not an entitlement to a loan; simply the first step in the Jersey Shore home buying process.

Pre-approval:

1. Comprehensive collection of data

2. Documentation required

3. Verification is done by lender

4. Certification of how much money the lender would most likely be willing to loan you

5. Not an absolute guarantee of financing. Funding won’t be given until after the property appraisal, title search, and any other items needing verification have been completed.

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About Patrick Parker Realty

Patrick Parker Realty, an independent boutique brokerage located in the heart of Bradley Beach is your local market leader. We understand the demands of a changing real estate market and avail ourselves of the latest industry information and tools to ensure excellent results. Our Commitment to You Our seasoned Real Estate Agents are committed to providing all of our clients, from first time sellers to veteran real estate investors, quality and friendly service. We walk you through every step of the sale process offering the guidance, feedback, and expertise needed to ensure your complete satisfaction.
This entry was posted in bradley beach real estate, Buyers, jersey shore real estate and tagged , , . Bookmark the permalink.

2 Responses to Pre-qualification vs. Pre-approval When Buying a Jersey Shore Home

  1. Jen says:

    good post..great share, great article..love to read it

  2. Marie Chelle says:

    Thank you very much my friend, you are very kind in sharing this useful information with? others…. he details were such a blessing, thanks.

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