The Differences Between Approved and Pre-Approved for a Mortgage

Differences Between Approved and Pre-Approved for a Mortgage

Almost everyone who has ever looked for a home has been asked if they have been pre-approved for a mortgage.  In many situations prospective buyers are advised that they need a pre-approval before they can look for a home and that a pre-approval is always necessary if you are making an offer to purchase a home. What many buyers and sellers do not understand is that the terms "approved" and "pre-approved" are implemented interchangeably.  What are the differences between a “pre-approval” and an “approved mortgage”?

Getting pre-approved for a mortgage is the first step in the mortgage process, and it is generally quite simple. You supply a lender or bank with your whole
financial situation, including your debt, earnings and possessions. After
evaluating these details, a loan company can give you a proper picture of the
mortgage sum for which you meet the requirements. A pre-approval is possible
over the phone or using the internet, and there's usually no fee charged for
this service. A loan pre-approval does not include an evaluation of your credit
history or an in-depth review of your ability to buy a home.

A pre-approval is a common assessment of a potential applicant's ability to meet
the criteria for a mortgage. That is basically it. Using this information, if
the borrower didn't lie (either deliberately or unconsciously), you can be
approved for "x" amount of that loan.

Getting approved for a mortgage is the next thing, and it is commonly much more
detailed. You will submit an official mortgage request (and normally pay a fee
for an application), and then provide the lender with the required documents to
perform a comprehensive check on your financial background and existing credit
score.  

It is a smart idea to be pre-approved for a mortgage before you begin your home
search.  A loan company will look at your financial circumstances and figure out the amount that fits your budget. The loan company will then provide you a written confirmation of this loan amount.  The pre-approval will be good
for a specific time period. A pre-approved mortgage is not an assurance to become approved for the mortgage.

Even if you have not seen the home you wish to buy, getting a pre-approval will help you keep a good budget range in mind and when you are ready to make an offer it will show the seller that you are ready to start your mortgage approval
process. 

Here are the current property sales for October 2012:

316 White Horse Pike Unit C-107  $52,500
6 W. Browning Road $64,800
614 Grant Avenue $90,000
519 Harrison Avenue $95,750
427 Lees Lane $109,500
717 Stokes Avenue $120,000
705 Grant Avenue $147,500
159 Lawnside Avenue $158,500
324 Lees Avenue $160,000
6 W. Knight Avenue $161,000
176 Lawnside Avenue $169,900
710 S. Newton Lake Drive $184,500
113 Park Avenue $190,000
18 E. Franklin Avenue $232,000
215 Woodlawn Terrace $250,000
12 E. Palmer Avenue $256,900
428 W. Browning Road $512,500

The were seven properties which sold in October of 2011.  The current month's sales represent an increase of 143%. 

Michele Katinsky is the Owner of Barski-Katinsky Real Estate, LLC, a real estate company serving Camden, Burlington, and Gloucester Counties.  Experience the Difference... http://www.theBKexperience.com