Buying A Home
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Pre approval vs Pre qualified
We are first time home buyers and just found someone we think we are going to use as our realtor and she recommended getting pre approved soon. What is the difference in getting pre approved and pre qualified? I
googled it and it seems like the two terms are used interchangeably
sometimes but sometimes they mean different things. Is one better than
the other? Which one would you recommend?
Re: Pre approval vs Pre qualified
Pre approval-- a lender runs your credit, as well as looks into your income
Pre qualified-- a lender only checks your income to approve you
A pre approval is needed in my area in order for a realtor to work with you.
The pre-approval is what you want. Pre-qualifications are generally considered to be meaningless and if you end up in a multiple offer situation, you'll want the strongest document possible.
My understanding is that a pre-qual asks for your income and a pre-approval actually runs a credit check. We didn't have to present proof of income for our pre-approval, we just had to tell them what it was.
It seems to vary by area. Where I am (podunk PA)...
Pre-Qualification - you give the lender your approximate income and approximate monthly debt payments and they figure out what you could afford.
Pre-Approval - the lender runs credit, verifies income (paystubs, W-2 copies), verifies debt (credit report), and money going in and out (bank statements). The pre-approval amount is usually wildly high. They can be modified to reflect the amount you're actually comfortable with (e.g. we were pre-approved for $260k and bought at $120k. We had the pre-approval letter revised to $130k since that's as high as we were willing to go.)
So, pre-qualifications are meaningless. You need to have a pre-approval letter in hand when you put in an offer.
Check around with the lenders and realtors in your area to see what they suggest.
http://pandce.proboards.com/index.cgi#general
You definitely want a pre-approval.
The bank will be able to tell you this for sure and it seems to vary based on other responses. We did not have to give any documentation for ours - I did it over the phone with a local mortgage broker in about 30 minutes.
If they are going to ask for paper work, I'd assume last 2 years of W-2s and tax returns, last two months of pay stubs, last two months bank statements (showing proof of funds), drivers license, social security cards.