Preapproval vs Prequalified Loan – What’s the Difference

While a payday loan online same day is the best way to fund a mortgage payment, it is still relevant to note certain key factors you may come across in the funding process.

One of these includes a pre-qualification process and a pre-approval process.

When it comes to buying a property, these are two key financing concepts you are bound to come across in your mortgage application process.

While most people tend to confuse these two terms, there are still a few significant differences to note between them.

Pre-Qualified Online Payday Loans for Mortgage Payment

Pre-qualification is the first step to getting financing for your mortgage payment.

It gives you a better insight into how much loan you qualify for. This is usually based on a set of data you submit to your direct lender.

Getting pre-qualified for a mortgage involves giving a bank or direct lender an overall picture of finances, including your current debt, income, and personal assets.

After which, the lender reviews all your submitted details and estimates how much you are likely expected to receive in funding.

The entire pre-qualification process for an online payday loan offer for mortgage financing is done online with no attached cost.

Pre-qualification can be done as quickly as 24 hours from the time of submission of all your required documents for funding.

Keep in mind that online payday loan pre-qualification does not include a check on your credit report or an in-depth look at your ability to purchase a home.

The pre-qualification process for an online payday mortgage financing offer includes a few basic requirements, such as your current residency status and age requirements.

Lenders will only give out short-term financing for mortgage financing to those that have reached the legal age for it.

Pre-Approved Online Payday Loans for Mortgage

To get pre-approved for an online payday loan offer for a mortgage payment, you will have to complete an official mortgage application form.

At this point, your direct payday lender checks to see your ability to pay back the loan settlement when due.

Information like your current employment status and size of income are cross-checked by your lender to see if you can actually be approved for the total amount of funds you are requesting from them.

Thus, if your monthly income cannot cover your loan debt and settlement, your direct payday lender will be unwilling to approve your online payday loan offer, as you may be unable to pay back the debt when due.

Your debt-to-income ratio (credit utilization ratio) is also considered at the pre-approval stage of an online payday loan offer for mortgage settlement.

Debt-to-income ratio is generally used to predict your ability to make complete payment on the loan debt for your mortgage financing. For that reason, borrowers are advised to have at least an ideal DTI of 36% and below.

A higher debt-to-income (credit utilization) ratio poses a higher risk to lenders, which may affect the pre-approval stage of your mortgage financing offer.

Your debt-to-income ratio also should not be more than 43% of your income. However, where it is more than 43%, your ratio is high; this discourages lenders.

Conclusion

Online payday loan pre-qualification for mortgage financing helps lenders to know who you are as a person and reflects that on the total number of funds you can borrow from them.

On the other hand, the pre-approval process helps direct payday lenders know what kind of interest rates and fees would be best suited for the total number of funds you are applying to get.

Thus, while you may pre-qualify for online payday loans for mortgage financing, you may not necessarily be pre-approved for such an offer you are requesting to get.