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Prequalification vs. Preapproval

Tuesday Sep 12, 2017
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If you’re a first-time homebuyer or if it’s been a while since you’ve purchased a home, you likely have a lot of questions about the mortgage process. Indigo Mortgage is always here to provide information and expert advice on all mortgage related topics. One thing that many people ask us about is the difference between prequalifying for a loan, and getting preapproval on a loan. These are two very different things.

Prequalification: When a borrower wants to prequalify for a mortgage, they submit a full mortgage application. The lender will then pull a credit report and collect income verification, such as bank statements. The lender will then analyze that information and, if it meets all criteria, the lender will issue a prequalification. This will give the borrower an idea of the mortgage amount they’re eligible for.

Preapproval: The preapproval process goes further than prequalification. All financial information collected from the borrower in the prequalification process is submitted to an underwriter. The lender will then be able to tell the borrower exactly how much they qualify to borrow. When you are preapproved for a mortgage, you will receive an exact loan amount in writing, so you can look for a home at or below that price level. This can make your home-shopping experience so much easier. In a competitive market, it may also give you an advantage if the home you love has multiple offers, because your financing is already assured.

When you’re shopping for a home, call Indigo Mortgage for your prequalification or preapproval.

Indigo Mortgage is a locally owned and operated company, serving homebuyers in Albuquerque, Rio Rancho, Santa Fe and all across New Mexico. For questions about selecting a mortgage lender, contact Indigo Mortgage in Albuquerque at (505) 836-5700. Indigo Mortgage offers five mortgage divisions including Residential, VA Loans, Reverse Mortgages, Construction and Commercial. They are licensed by the Nationwide Mortgage Licensing System (NMLS #188348), and can provide loans anywhere in New Mexico.

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