Preapproved and prequalified are two most confusing terms that you come across while applying for a loan. In your home hunting process, these two terms become a major hurdle that confused you from selecting the right option and closing your deal fast.
To invest in Fort St John Real Estate, you need to gather the funds for full payment. That’s where you need to find the option when you are not having the complete upfront amount with you. Various financing options are available to help you out from this situation and finance your new property.
However, the loan you receive depends upon various factors like credit score, your income source, etc. When buying a home, the bank can provide you with two options i.e. preapproved and prequalified.
Preapproved:
The preapproved is the systematic procedure where you share all your details including your income details, saving, your previous loans, etc. and even permit the lender to draw your credit history. Once you are approved for the loan, you can proceed to purchase your dream house. The preapproved is simply defined as the trust of the lender who is ready to lend you the required sum to get homeownership.
Prequalified:
In the case of prequalified, you are given written approval from the lender about the maximum amount that you can finance. However, the final price depends upon your debt, income source and your savings. Here, you don’t need to provide any documentation. That’s why it is best suited for those who want to move out of their low budget and buy a bigger home for their family.
What’s the difference?
Coming to the difference, the only point that makes them different is the time that you will invest in getting loan approval. In prequalified, the buyer becomes eligible to buy any house; even when the budget is more than your limit. On the other hand, the preapproval gives you the ability to negotiate on the price and close the deal at the right price.
However, in case you observe frequent changes in the home bids, it’s better to get preapproval that will save you from buying the property at a high price. Fort St. John has real estate agents who can help you get the right property with both the above-mentioned options.
Further, there are some points which you should note about preapproved & prequalified:
Don’t take preapproval from multiple lenders:
It’s good to ask for a preapproval from more than one lender, but don’t take the approval from all of them. In this case, you need to share your credit history which may result in negative credit score due to frequent credit checks.
Don’t Trust Rate Lock 100%:
The rate locks pause the inflating interest rate for 30 to 90 days. But you should know that prequalification rarely provides you with a rate lock. In the case of preapproval, multiple factors decide the rate lock.
So, this is all about preapproval and prequalified that will help you in your house hunting. The information shared will let you find the right option among the two.
