The Difference Between Pre Approval & Pre Qualification
Many of today’s manufactured home buyers view the terms “Pre Approval” and “Pre Qualified” as interchangeable. Far from it, the distinction between these two terms is an important one to thoroughly understand.
When a buyer gets pre-qualified, lenders perform a quick FICO check to gain a clear understanding of how much home a buyer can afford. In essence, when a buyers pre-qualified, the lender is estimating it would most likely approve the buyer’s loan for a set purchase amount.
To become pre-qualified by a lender, buyers will need to provide mortgage brokers with some basic financial data on their gross monthly income, and any additional reoccurring sources of income. Additionally, buyers will need to provide their outstanding balances and monthly payments on current debts. Also concerned with income levels, buyers should accurately report how much money they’ve saved for their down payment. After some calculations, the buyers qualifying score is calculated to determine what percentage of your gross monthly income can be utilized to repay the mortgage and related monthly bills.
For those serious buyers, the pre-approval process is slightly more intense. In order for lenders to issue a letter of pre-approval, mortgage brokers will need to scrutinize and substantiate your total debt to income ratio, all savings and assets, as well as viewing a credit report to ensure buyers can repay the total loan amount. While getting pre-qualified provides the buyer an educated guesstimate of their total purchasing power, a pre-approval indicates the likely lender would absolutely be approved for the loan.
For manufactured home buyers, having a pre-approval letter from a lender is exceptionally useful for multiple reasons. First and foremost, with a pre-approval letter in hand buyers instantly understand how much home they can afford. This benefits today’s manufactured home buyers by informing them from the outset of their exact budget. With financial parameters established, sales representatives are better able to focus their efforts on finding the best manufactured home for your budget.
Once your manufactured housing budget is established, being pre-approved provides you with an advantageous position over other manufactured home buyers. With a pre-approval letter in hand, the retailer is assured that you have access to the necessary funding to consummate the deal.
In a world where cash is king, having a letter of pre-approval can help buyers negotiate the best deal possible on their new manufactured home.