In most of the cases the realtors would suggest the buyers to get a pre-qualified mortgage loan as a first step towards buying their houses. But before getting into any conclusion, it is important that a person should understand the basic difference between the two terms, pre-qualification and pre-approval loans. This is because they are often interchanged while use and hence become confusing and misleading at times. It’s true that they are related but in reality they signify totally different levels of approval.
Pre-Qualification Mortgage Loan
Pre-qualification does not generally include any credit report or any in-depth look at the true ability of the house of the buyer. One just needs to provide the information about his income and liabilities to the lender and they calculate the maximum amount he can borrow without any verification of the information.
Pre-qualification does not guarantee an interest rate or loan approval but gives a general idea of the price range that can be afforded before actually starting the lookout for the house.
Pre-approval Mortgage loan in Calgary
This process is a more formal one. In this process the lender would check the credit report of the buyer and would also look closely at his total income and net worth. Then only he will confirm the maximum amount of loan, the loan programs and the rate of interest for a particular period of time which he is eligible to get. The Mortgage solution providers in Calgary have explained that the pre-approval mortgage loans gives the confidence to the buyer to shop for a home but at the same time it does not guarantee the approval of the loan by the lender. But it surely strengthens the position of the buyer as the sellers willingly accept the proposals of the pre-approved buyers.
It is hoped that this article alerts the buyers with the basic difference between the pre-qualification and the pre-approved mortgage loans in Calgary and provides them with some financing options which will help them to reduce the total cost of their dream homes and the total time required to pay it off. It is however, at the discretion of the buyer and the strength of his assets and liabilities that he can choose for a particular type of mortgage loan for his perusal. It will be again a very good decision if the buyer takes the help of an expert mortgage solution provider in the matter.