Confused

[Anonymous]

Can anyone explain the difference between pre-qualify, pre-approved, and approved? I keep hearing and reading different ideas and definitions.

A couple of weeks ago, I called a local bank. I gave the representative my estimated numbers (income, debt, middle credit score, downpayment, etc). He then told me what he could offer me based on that info. Is there a term or word for that exchange of info? Also, generally how reliable and reasonably accurate would this be?

I am afraid to do an actual credit check for a pre-approval (i think?) because I feel that my credit score is very close to 2 different tiers of rates/terms. Also, I really don't know when I can actually buy a home (1-8 months).

Having to repeatedly check my credit while shopping for rates over a long period of time leads me to believe that I may in fact ding my credit. Again, I realize it may not ding it that much, but just a few points may actually cost me quite a bit.

[Anonymous]

 i amvery new at the process but will share what i have learned so far

prequalify- very informal, you give incoome information and the banks give a ball park of what you can afford

preapproved- you provide all financial info and your credit is run. the bank then gives a more accurate estimate of what you are approoved for pending all info provided is true and without change

approved- like preapproval but this involves a house you are interested in buying. after you are preapproved, you find a home in you prce range, make an offer, the house gets  appraised and then you formally apply for the loan.

you should run your credit for yourself before allowing a lender too. its nice to make sure everything is accurate and know kind of where you may stand. this also gives you a chance to fi your credit if need be. as far as the "dings" if you apply at 1 or 14 mortgage companys in 2 weeks it affects your score as if it was only one inquiry.

hope this helps. 

[Anonymous]

Hey thanks for clearing that up. So do you think what I did was a pre-qualify?

When is a good time to actually get pre-approved? Especially in my situation? Basically, look for a house first or pre-approve first?

Also, can anyone recommend a good mortgage website that is very current and up to date with all that's going on these days?

[Anonymous]

Once you have already applied, you want to get pre-approved.  They already have your credit pulled, all they should need for a pre-approval is paystubs, bank statements, w-2's, and verificatin of employment.  Pre-approval is just them confirming all the info you gave during the pre-qual process..

That said, alot of sellers (banks in particular) will not even consider an offer if it does not come with a pre-approval letter.

One trick, make sure you pre-approval letter is written up for each property.  If you are approved for 200K but find a property for 160K, don;t send a pre-approval letter for 200K or the lender may try to be more pushy on the price.  Send on in for 260-265K.