Planning to get a home is already a big step, figuring out what type of home you can afford is the first step you would want to take in understanding how to get into your dream home. There are two ways you can get a budget, one is pre-qualifying and the other is an pre-approval. So what are the differences between them both?

Pre-qualifying is basically a quick way of seeing how much you can afford, it’s basically a educated estimate. In pre-qualifying there are only 2 major variables; how much is your income? and how many debts do you have? Over that it will come to an educated estimate on how much you can afford.

Pre-approval is like getting an approval, it is a longer process then pre-qualifying but it tells you your actual budget. A pre-approval requires you to submit financial documentation for your income as well as it takes a look at your credit score while looking at all your debts as well. Once you’ve got a pre-approval the interest rate can be held for 60,90 or 120 days. This means you can get today’s interest rate even after 60,90 or 120 days depending on the time you think it will take you to close and get into your new home.

So when you are looking for your next home make sure you get Pre-approved by your mortgage agent or lender.