What is the difference between pre-approval and pre-qualification?

If you are looking to get financing for your recreational property, there are several different options you will have available to you, depending on which financial institution you turn to for assistance. There are two major types of lending that people have access to: a pre-qualification or a pre-approval. There are distinct differences between these lending opportunities.

A pre-qualification is the easier of the two steps, but it is the one that is not as helpful in the long run. For a pre-qualification, a bank will only take a look at the credit of an individual before considering that person for a loan. This provides a very limited snapshot of somebody's entire financial situation, which can present real issues on both sides at some point down the line.

A pre-approval means that the bank has run a credit check as well as looked at an individual's finances. This means investigating the most recent pay stubs, tax returns, investments and savings accounts. This thorough analysis verifies  that the down payment can, in fact, be paid in full. A pre-approval letter will then be provided, stating that the applicant can purchase a property up to a certain amount of money.

Heritage Land Bank only does pre-approvals, because this saves potential buyers time and frustration in the future. Some realtors, for example, will only consider individuals with pre-approval letters from a financial institution as serious buyers. Without this, somebody might not even get the opportunity to look at a piece of land that he or she is interested in buying.

If you are interested in expanding your recreational property, be sure to contact a loan officer from Heritage Land Bank as soon as possible! Take a look at the rest of our website to learn more about all of the different financial options that we offer to our customers.