Many LGBT real estate buyers and gays and lesbians borrowing a mortgage to finance or refinance a home want to know the difference between a prequalified and a preapproved loan. On the surface they sound quite similar, but in practice they have significant differences that relate to the level of commitment a lender is making to the LGBT borrower.
- The big difference is that prequalification has to do with the process a lender goes through to find out if a gay real estate buyer is eligible for a mortgage. This typically means that the lender will check the credit rating of the LGBT mortgage borrower and ask for a few financial details. Gay and lesbian real estate buyers who meet basic criteria for borrowing will be considered prequalified – which means they essentially qualify for making a loan application.
- But in no way does prequalification represent a legal commitment on behalf of the lender to actually loan money. It is no guarantee that the LGBT borrower will get the loan, it is more like a prediction that the gay borrower will succeed in getting a loan once they make an official loan application.
- In other words, prequalification is a screening or filtering process to weed out those LGBT borrowers who don’t have a chance of qualifying for a loan. Without loan prequalification it is too easy to assume that a loan is forthcoming, and that misleads the LGBT real estate buyer by giving them false hope. It is also a waste of time for the lender, who wants to concentrate instead on those LGBT mortgage borrowers who do qualify and will eventually have a realistic chance of getting a loan.
- Preapproval, on the other hand, is a status that represents a much bigger commitment by the lender. For a gay or lesbian home buyer to go through the necessary steps of getting preapproved, they basically have to do all the documentation of income, assets, and credit that is involved in a full blown mortgage application process.
- If they pass all of the standards set by the lender, then the lender makes a firm commitment to providing a loan – and the lender specifies exactly how much the LGBT home buyer can borrow.
- Armed with that information the LGBT buyer can then go with a gay-friendly Realtor to shop for homes in that price range and negotiate with sellers from a position of strength. Since the seller can see a lender-signed letter of loan preapproval, that lets them know that the potential gay or lesbian buyer really does have the financial means to purchase.
To learn more about LGBT mortgages and how gay and lesbian real estate buyers can get preapproved or prequalified for a loan from a LGBT or gay-friendly mortgage company, check out the informative articles and resources at GayRealEstate.com. The site has everything a LGBT borrower needs to find a loan and a home, and it maintains the largest database of LGBT Realtors and gay-friendly real estate agents in the world.