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Difference Between Pre-Approved and Pre-Qualified for a Mortgage - YouTube
Channel: Realtor.com
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hello this is Audrey Whittington with
realtor.com and we're going to be
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talking about the complexities of the
home buying process from A to Z and
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we're gonna kick it off with Dara Delgato
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from Dara Delgato home loans and we're
gonna talk about the difference between
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getting pre-qualified versus
pre-approved. Dara let me start by asking
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you how long have you been in the
industry 16 years 16 years well I was a
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loan officer way back when so I know
that that's a lot of loans okay so we
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have a great expert with us today so
what's the difference between
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pre-qualified and pre-approved so a
pre-qualification is generally not
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supplying your documentation like your
bank statements and tax returns no W2's - No W2's
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- is it's getting a general feel for
what you might qualify for by just
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telling the loan officer okay I make
this amount I have this much in the bank
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and I think my credit score is around
here and then they can kind of run the
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numbers and get an idea of what you
qualify for but it's not going through
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the hole it's still good to talk to a
loan officer so really it's like I'm
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thinking about buying a home and I want
to make sure that I'm looking in the
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right amounts yeah there's somebody that
maybe isn't looking to buy right away
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even gotcha
okay so recommendation to people even if
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you're out there looking on realtor.com
you should still get pre-qualified it's
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helpful even if you're maybe a year out
yes okay so what's the next step I just
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found something and now I want to get
pre-approved what does that mean
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so pre-approved is is just like you know
you have your golden ticket knowing that
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you are ready to go and you find the
home that you want and you qualify
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there's not gonna be any hang-ups in
underwriting so for instance you do
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supply your tax returns your w-2s bank
statements everything to your loan
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officer and then the loan officer
calculates the qualifying income runs
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credit runs the loan through the
automated underwriting engine and make
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sure that everything is good alright so
let's talk about some of those that was
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a lot of steps so let's talk about that
for a minute
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especially credit like you know I think
a lot of people who are buying a home
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for the first time don't really know
what is good credit
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let's talk about what's good credit well
typically anything over 700 is good you
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know there if you're well in the 700s
you know close to 800 that's like
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amazing but you don't have to have AB
700 plus credit score to buy a home or
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to qualify there are many programs that
go down to you know 620 for instance oh
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okay good so there's kind of something
for everybody yeah there's there's
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different programs that you don't have
to have perfect credit for or you could
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you know have a bankruptcy and you just
have to find out which program can meet
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your now for the pre-approval letter
right I've given you all my
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documentation you've run my credit and I
think I think that it might also really
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quick be helpful to people is to also
understand what goes into a credit score
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I always tell my kids make sure you pay
your bills on time but what else like
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what are the kind of factors that
determine whether or not I'm gonna end
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up with a good credit score so paying
your credit on time your any bills you
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have automated payments yes keeping your
balances on your revolving credit cards
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low as low as possible ideally below 30%
of the credit limit and using your
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credit you know even if you you know use
it just a little bit you know for gas
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and then pay it off that's that's all
good if you had you know any negative
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credit occurrences bankruptcy those will
show up if you had an eviction you know
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those things you know can really hurt
your your credit collections things like
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that but paying things on time little
but and having credit I think a lot of
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people don't realize that you need a
credit card and maybe I mean I hate to
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say it like that but you do need a
credit card
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so really the banks are looking for the
fact that you've had some level of debt
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and they know you're gonna be a
responsible debtor that's a fair say but
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they want to see your track record of
what you've done and yeah you have to
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buy for credit and show a track record
good okay so then I have my pre-approval
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letter and I think we're gonna get into
this a little bit in one of the other
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series but let's touch on it for a
second what am I doing with this
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pre-approval letter besides the fact
that I'm on roads are common it helps me
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know not to over by right what else
would let what else is it helpful for so
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your pre-approval letter
goes to your real-estate agent and they
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use that pre-approval letter to submit
your offer so if you're serious about
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you know a home and you want to you want
to make an offer the your agent will
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submit that with your pre-approval
letter and and then you'll submit it and
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see what happens great so I need really
that pre-approval letter it's really
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gonna help me when I'm submitting for a
contract yes you do need that most
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agents or if not all agents won't show
you a home unless you have the
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pre-approval letter because they don't
want to waste their time they don't want
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to waste your time is you know you can
see buyers go out there and they want
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this house and they just fall in love
with it and they can visualize their
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whole lives and then all right they
don't qualify so you go to an open house
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obviously you're a realtor economy could
look all day right but really if you're
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going to really have a formal
appointment you're gonna you know really
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looking at writing a contract you really
want to have that pre-approval letter
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pre-approval letter be familiar with
your payment make sure you're
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comfortable and and everything works for
you so that was really helpful this is
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Audrey Whittington with realtor.com we
could see that getting the pre-approval
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is going to be key and I think that'll
come up in some of the other video
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series we're gonna be doing where we
walk you through the complexities of the
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home buying process thanks for joining
us thank you
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you
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