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Loan Pre-Qualified | Pre-Approved


Once you decide to purchase a new home or investment property, the best thing you can do is make sure you are pre-qualified / pre-approved for a loan. Being pre-qualified / pre-approved for a home or investment property loan gives you the an idea of exactly how much you can spend on a new home or investment property. There is big difference between being pre-qualified and being pre-approved for a loan.

Most mortgage professionals, will either “pre-qualify” or “pre-approve” your mortgage application. The terms are often mis-used and interchangeably which is very unfortunate for loan borrowers. You need to to understand the difference between the two pre-loan processes.

The difference can mean you might miss out on an incredible investment opportunity or even worse lose your dream home. Nothing is sadder than seeing people that already mentally arranged their furniture and picked out the new paint colors lose their dream home or the much anticipated second home.



A pre-qualify for a loan is basically a guesstimate. The mortgage professional will review your finances, credit report and income and then, based on their experience, estimate an approximate amount of a mortgage that you should be able to qualify for. “Approximate” is highly subjective. You might think that you qualify for more loan than you really do.

Based on loose and subjective information you could enter into negotiations for a new home or investment property without the proper loan backing. If the property is the right price or just incredible, there is a strong chance you will lose out to another party who is pre-approved for a loan and does not have to wait for loan approval. This is also the strong chance that that while you may have all the pre-qualifications and get approved for a lesser loan amount than you anticipated. You also should know that pre-qualified is often considered a less desirable offer because



A pre-approval is the actual process of applying for a loan and sending your loan application through the underwriting process. You apply for a mortgage with an address “To Be Determined Later” and the application is submitted to a lender and an approval is issued subject to the home qualifying. if you are loan pre-approved you will receive a loan commitment amount that is conditional upon an appraisal of the the desired property meeting the bank’s approval and the purchases price.

The loan application process takes between 30 – 45 days. So you can see where having a pre-approved loan amount can help increase your chances of successfully negotiating a home / property investment purchase. Having a pre-approved loan amount also has the advantage of time because you will only need a property appraisal for loan approval. You can sign the purchase agreement and have the day of closing within 1 to 2 weeks versus the 3- – 45 days a loan application would take.


Being pre-approved for a loan means that you know how much buying power you have before you make the offer on the home of your dreams.

You should apply for the maximum loan amount you can qualify for in a pre-approval, unless you know for 100% certainty that you will not want an extra  $5K Р$20,000K for room to negotiate your dream home or to buy a little more home. You can always reduce the mortgage amount in a day or two, or maybe even in hours. However increasing the mortgage amount will take the same amount of time as the initial pre-approval process because you have to go through all the steps again.

Because it takes time to find the right dream home, it just makes sense to get the loan pre-approval taken care of. Buyers that have a pre-approved loan often are looked at more seriously because it means that the closing can happen sooner in most cases.