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The home buying process is complex, with lots of essential steps involved. Mortgage pre-qualification and pre-approval are two important steps that can increase your chance of being approved for a home loan. Because these two processes are often conflated, this guide explains how each works and why they're important. 

Pre-Qualification

Pre-qualification provides a rough estimate of how much money you may be approved for upon applying for mortgage pre-approval. You'll provide the lender with information on your current income, how much debt you have, and any additional assets in your possession. 

From there, the lender will review the information to determine the possible loan amount you could be approved for. You should receive a pre-qualification letter complete with the estimated loan amount in one to three days. 

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Pre-qualification only provides a rough estimation of your financial outlook because it doesn't involve a credit check. The lender will also assume that the information you submitted was accurate, so the loan amount may change if there are any errors or inconsistencies. However, a pre-qualification letter is essential for proving to a seller that you're capable of making a legitimate offer on the property. 

Pre-Approval

While similar to pre-qualification, mortgage pre-approval does entail a credit check. The lender will also ask you to complete a loan application and provide supporting documents related to your income, debt, and assets. This ensures a more comprehensive process that will result in the lender committing to a certain mortgage amount, as long as the current conditions remain when you actually make an offer on a property. 

Pre-approval greatly increases your chance of securing a property, as sellers will view you as a safer choice than a buyer who is not pre-approved. It also lets you know the interest payments associated with your home loan, which helps with budgeting. Like pre-qualification, you'll receive a pre-approval letter at the end of the process that can be presented to sellers. 

 

When in search of mortgage pre-approval in Tennessee, working with a reputable lender is crucial. That's why so many homebuyers turn to Fairway Independent Mortgage Corp. of Chattanooga when seeking financial assistance to purchase the property of their dreams. These loan professionals will guide you through the process step by step, so you can rest easy knowing you're in good hands. They also offer a wide range of financial products, from conventional mortgages to FHA loans. Visit the website to learn more about their services, or call (423) 708-5253 to schedule an appointment today. 

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