What does it mean to be Pre-Approved for a Loan?

Pursuing buying a property is likely the largest and most important purchase many of those reading this will make in their lives. Additionally, as a first-time property-buyer, there is a lot of terminology one may be unfamiliar with. A term that is brought up often and early in the property buying process is “Pre-Approved” in terms of a loan. We wanted to write and share a blog on what it means to be ‘pre-approved’, its significance, and how to go about becoming pre-approved!

Pre-Approved: What does it mean?

Simply put, pre-approved means that a bank or lender has investigated one’s credit history and deemed you are a candidate to receive a loan for a mortgage. Becoming Pre-Approved is directly correlated with one’s credit score. There are a variety of online tools one can use to check their own credit without affecting one’s score. But, becoming pre-approved for a loan isn’t just about credit score…

Steps to Becoming Pre-Approved

Checking one’s credit is a good start when looking to become pre-approved. Doing this provides you as a buyer a better idea of what you may be approved for. If your credit is in bad shape, you may want to take some time to improve it as this can save you money in the long run.  Prior to finding a property, you need to begin working with a lender and fill out a loan application. Mortgage and loan applications can include additional personal financial records as this is how the bank or lender determines if they want to lend you money. Upon completion of the lender’s investigation, if granted pre-approval status, you will be given a specific loan amount. Now, you can begin looking at listings at or below that price point!

Pre-qualified isn’t Pre-Approved!

A similar term within the real estate industry but it means something different. Pre-qualified means you have sought out a bank or lender and have had an information meeting regarding the pre-approval process. While being Pre-qualified is a good first step if you are on the fence on whether buying a property is right for you at the time!

Quinn Associates: Massachusetts Premier Real Estate Company

If you have questions regarding becoming pre-approved or about the commercial buying process, give us a call today! We are happy to connect with individuals seeking more information about our industry, the properties we represent, or trends we have been seeing in the area. Our phone number is (508)588-5600 or you can leave an inquiry on our convenient online contact form linked here!