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Prequalified vs. preapproved
Is there a difference between prequalified and preapproved when searching for Arizona luxury real estate?
Which is Best for Arizona Buyers?
The words ‘pre-qualified’ and ‘pre-approved’ can often be used interchangeably, and some buyers believe they mean the same thing. However, they do not, and one can garner more negotiating power than the other. Here’s the difference:
Pre-Qualification for Luxury Buyers
Generally, this is the first step in the mortgage process. You, as a buyer, complete a 1003 loan application and your lender will then pull your credit report. Based on this and the information you provide on the application, your lender can give you an estimate of what you will qualify for. You are then pre-qualified. The pre-qualification form(PQF) will not have boxes 25-28 checked as ‘yes.’
Pre-Approval for Arizona Buyers
This is your next step in the approval process and is where you provide your lender with the necessary information and documents (tax returns, W-2s, pay stubs, etc.), which enables the lender to verify income, assets, and debts. Using this information, your lender will confirm your ability to obtain financing and specify the amount you are approved for. Using the pre-qualification form (PQF), lines 25-28 will all be checked ‘yes.’ This position provides you, the buyer, with the strongest negotiating power. Once an offer is made, it will not be contingent on you qualifying for a loan. Obtaining a pre-approval early in your home buying process enables you to move quickly and be taken seriously. So, before you start looking to find your dream home, get pre-approved!