Mortgage Basics: Getting Pre-Approved or Pre-Qualified?

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Mortgage Basics: Getting Pre-Approved or Pre-Qualified?

By kevin | April 29, 2008

One of the realities of buying any home including Miami foreclosure homes is that most buyers will need to obtain a housing loan. Most real estate experts advise buyers to get pre-approved or even pre-qualified for a mortgage before going on a foreclosure hunting expedition.

As a buyer, you will need to know the main difference between these two in order to realize your chances of getting a mortgage for the purchase of one of these Miami bank foreclosures.

Mortgage Pre-Qualification

When you speak of getting pre-qualified for a loan, you should understand that it is a process where you would need to contact a lender, who will, in return, ask you specific information regarding your financial status. In most cases, it will include details you’re your current address, social security number and annual income. The lender might even ask your permission to obtain a credit report. Once all the information is obtained, the lender will then send you a letter informing you of how much mortgage loan you are qualified for. Remember that this letter comes with many disclaimers including one that states that you will still be subject to a formal application procedure.

Mortgage Pre-Approval

On the other hand, getting pre-approved would involve the standard underwriting process employed by lenders. This includes verification of income, cash reserves, employment, credit history and other qualifying ratios. You should understand that even though you were pre-qualified, you might not get pre-approved. In most instances, the information that you have relayed verbally during pre-qualification might cause problems during the mortgage approval process.

It would be recommended that you get pre-approved first before you make an offer for any of these Miami FL foreclosures. Once this is accomplished, you can now make a shortlist of amazing foreclosed properties. Of course, it would help if you have Miami foreclosure listings to guide you in your search.