Pre-Approval versus Pre-Qualification

[ 0 ] October 16, 2012 |

A realistic understanding of how much you can expect to qualify for is a good first step toward the goal of homeownership.  The letter of pre-approval can be just that to make it happen.  There is a difference between a letter of pre-qualification and a letter of pre-approval, and it’s important to know the difference.

Pre-Qualification

Pre-Qualification means there has been loan calculations made that show how much you ‘may’ be able to borrow.  While pre-qualification can reduce the processing time for home loans, indicate how much house you can afford and provide certain leverage in bargaining power, it doesn’t necessarily guarantee that such a loan will, in fact, be made by the lender.

Pre-Approval

Pre-Approval means you actually have a loan waiting, subject only to finding the home and the home appraising at the sales price.  The “pre-approval” letter represents an actual commitment on the part of the lender.  In order to secure this letter, it is necessary to complete a formal loan application and pay the associated fees.  Credit, salary, and bank funds will be checked, and if the loan is a good investment, the lender will issue a pre-approval letter, which provides a commitment for a limited time, subject to a satisfactory appraisal and title search.

Contact one of our dedicated Lending Team members to see what IAA Credit Union can do for you at 800.676.2541.  You may also apply online at www.iaacu.org

Tags: , , , , , , , ,

Category: Homes & Loans

About the Author ()

Hello! I have been with IAACU since August of 2011. I am a Member Development Rep. You might have talked to me a few times on the phone or through e-mail.

Leave a Reply

Time limit is exhausted. Please reload CAPTCHA.