The Differences Between Being Pre-approved and Pre-qualified
Buyer: Yes, I’ve been pre-approved.
Me: Pre-approved or pre-qualified?
Buyer: What is the difference?
A conversation I’ve had with many buyers and it is so important that you understand the difference between a pre-approval and a pre-qualification so you don’t hit an unnecessary road block in your home ownership journey.
Being pre-qualified is something anyone can do online based on the information that you provide. The majority of the time, the purchase price you will receive is not accurate as the online application is simply not complete. Vital information is not taken into consideration such as your credit score, length of employment, self-employment status, being new to Canada and so much more.
A pre-approval is a formal pre-qualification which is far more details and will require proof of everything you complete in your application. Your mortgage broker will ask you for documents to support your application like proof of employment via an employment letter, proof of down-payment (must be saved for a min. of 90 days) or proof of savings. They might also need to do other things like a credit check or verify a gift letter.
Once you are formally pre-approved, you will get a pre-approval letter with the mortgage and purchase price, the interest and what your monthly mortgage payment will be.
Getting pre-approved for a mortgage is critical and should be your ultimate first step to ensure a flawless home-hunting experience, increase your negotiating power and allow you to view homes in your budget. Now let’s go shopping!
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