You were looking for a new mortgage or car loan and came across the terms “prequalification” and “preapproval”. what do they mean? It’s like the difference between casually swiping on Tinder and the serious commitment to “do.” Please let me explain.
But before that, a little bonus fact about retirement benefits. In case you haven’t noticed… people are getting a lot of retirement benefits these days. I don’t know who’s next.
A word about retirement benefits
Did you know that How are retirement benefits taxed Does the structure change? Generally, retirement benefits are considered taxable income and are subject to federal and state income taxes.
However, if your employer offers a retirement package that includes unused vacation and sick leave payments, those payments may be subject to different taxation.
Additionally, if your retirement benefits are spread out over several years, you may be able to take advantage of future tax rate cuts to reduce your overall tax burden.
We recommend that you consult a tax professional to understand how your retirement benefits are taxed and how to minimize your tax burden.
Back to Loans – Are You Eligible?
Getting prequalified for a loan is like swiping right on Tinder. It’s a quick and easy process.
If you provide some basic information about your income and debt, the lender will give you a rough estimate of how much you could possibly borrow. is.
Pre-approval goes one step further
But if you’re ready to get serious, it’s time to get pre-approved. This is a more formal process in which lenders review your credit history, income, and other financial information to determine how much they’re willing to lend you.
As with filing paperwork with the CIA, you will need to complete a formal loan application and provide supporting documentation of your financial information.
There may be a fee for pre-approval today, but it’s worth it for the peace of mind that you’re serious about your financial future. Plus, with pre-approved loan backing, you can negotiate with sellers like a boss with confidence.
So, in summary, pre-approval is like swiping right on Tinder, and pre-approval is like getting down on one knee with a diamond ring. If so, it’s time to pose the question with a pre-approved loan.
In summary
Here’s a specific breakdown of the difference between pre-approved and pre-certified:
Pre-approval and pre-certification – what’s the difference?
Pre-qualification:
- quick and easy process
- It tells you how much you can borrow
- Usually done online or by phone
- No cost
- Basic information about income, liabilities and assets is required
- without credit check
- not a formal promise that the lender will lend you money
Pre-approval:
- Detailed process
- Lenders check your credit history, income and other financial information.
- Usually requires completing a formal loan application
- need documentation To support financial information such as tax returns and bank statements
- Fees may apply. This depends on the lender and the type of loan you are applying for.
- More accurately estimate how much you can borrow
A formal commitment from a lender to lend money pending approval of the property or vehicle you wish to purchase.
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author: Jen Robin
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