You’re excited to buy a new home and start a new life with your family, but taking out a new mortgage can be intimidating and confusing.
When you first visit your bank, there are many things to understand, such as mortgage options, interest rates, and amortization periods.
Still, there’s something even more important that you should pay attention to. It’s something that especially first-time home buyers overlook or get confused about as they don’t use a mortgage qualification calculator.
The main thing you should focus on is whether you’re pre-qualified or pre-approved for a mortgage. Most people think they’re the same thing, but that couldn’t be further from the truth as there’s a clear difference between them.
You should understand the difference clearly because it can make a world of difference in the mortgage process.
To know whether you’re pre-qualified or pre-approved, you need a mortgage qualification calculator. Without pre-qualification or pre-approval, it will take months to get your offer accepted by the seller.
What does “pre-qualified’’ mean?
At a very basic level, the pre-qualification process is when your mortgage lender collects financial information to estimate how much you can afford for a house.
This process is vital, as it gives you a general idea of your budget and how much you’ll be approved for when it comes to the mortgage.
Pre-qualification is usually based on self-reported information instead of your credit report or financial documents. This means that the pre-qualification process will be a ballpark estimate.
Also, pre-qualification is important when you begin searching for a house because real estate agents and sellers will require you to work with a mortgage lender so they know you can afford a home.
You’ll also receive a ‘’pre-qualification letter’’ that you can show to your agent or seller as proof of working with a mortgage lender.
Being pre-qualified is important but doesn’t carry the same weight as being pre-approved. Nevertheless, to know whether you’re eligible for pre-qualification, a mortgage qualification calculator is the easiest solution.
What does “pre-approved’’ mean?
Pre-approval also provides borrowers with an estimation of how much they can afford to buy a home.
However, a mortgage pre-approval is a more official step than pre-qualification. To be pre-approved, you need to verify your financial information and credit history, as well as pay stubs, tax returns, and even your social security card.
A pre-approval is stronger proof than pre-qualification that you can afford a specific house, and it will give you the green light to start working with a real estate agent.
Also, because your financial information has been officially approved, you and your real estate agent can use that information to focus only on the houses you can afford.
Without pre-approval, the seller might not trust your offer and will probably refuse it. The fastest way to know whether you are pre-qualified or pre-approved is by using a professional mortgage qualification calculator.
How Can Northwood Mortgage Help You
Northwood Mortgage is one of the GTA’s largest brokerage firms, and with our professional and experienced specialists, we’ll ensure that you get your pre-qualification and pre-approval.
We’ve been in the business for more than 30 years, and with a staff of over 135 professionals, we only provide the highest-quality service.
Our mission is to guarantee complete customer satisfaction at an affordable price with our mortgage qualification calculator. This way, you’ll have peace of mind knowing your offer will be approved.
If you’re looking to buy a new home, you must first get pre-qualification and pre-approval if you want to make the process faster and easier.