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5 Reasons to Get Pre-Qualified for a Loan

You’re probably wondering why you should get pre-qualified for a loan, but if you’re planning to borrow any kind of money, this is a step that can help you financially prepare.

Getting pre-qualified for a loan—especially if you’re getting ready to start a family—is an important step in the family building process. You’ll want to have a clear understanding of your finances, a snapshot of your credit history, and the power to negotiate. And these are just a few of the benefits of getting pre-qualified.

First, let’s define what pre-qualification is, how it differs from getting pre-approved, and how Daylight Grow can support you on your LGBTQ+ family journey.

What is Pre-Qualification for a Loan?

Prequalification involves passing or meeting initial requirements by reviewing your creditworthiness to determine if you qualify for a loan. Loan prequalification is solely based on the basic information you give to a lender.

Pre-Qualified vs. Pre-Approved

The biggest differences between prequalification and preapproval for a loan are as follows:

Step 1: Pre-Qualification

  • Provides a ballpark estimate of how much you can borrow based on data you submitted to a lender
  • Doesn’t hold as much weight as pre-approval
  • Usually free online or over the phone

Step 2: Pre-approval

  • Provides a more specific estimate of what you can borrow from a lender
  • Speeds up the lending process
  • Requires the completion of an application and submission of documents that give the lender a clear picture of the borrower

However, both of these steps mean that a lender will review your financial situation to see if you meet at least some of their requirements. Don’t hesitate to reach out to our team at Daylight Grow for more information on loan prequalification.

Benefits of Getting Pre-Qualified for a Loan

Whether you’re applying for a loan for the first time or you’re

1. Getting pre-qualified is quick & free

On average, you can receive a basic pre-approval letter in about 3 minutes. For a verified pre-approval letter, this can take up to 7-10 business days and in some cases it can take even less time.

2. Give a snapshot of your credit history

Another important benefit of getting pre-qualified for a loan is that it will give you a brief snapshot of your credit history. While it won’t be a full credit report, it will include the following information:

  • Any current credit you have
  • Your payment history
  • Details of anyone you’re financially linked to
  • Your public record information over the past 6 years

This is enough information for a lender to determine whether you pre-qualify for a loan.

3. Understand your budget better

Pre-qualification can give you a good idea of how much you can borrow based on your income and other financial factors. This can help you understand what your budget looks like and what type of loan you can afford.

4. Strengthen your negotiating power

If you have been pre-qualified for a loan, you will have a better idea of what type of interest rate you can expect and what your monthly payments might be. Armed with this knowledge, you can negotiate better terms with lenders and potentially save money on your loan.

5. Get faster loan approval

Pre-qualification can help speed up the loan approval process, as lenders will already have some basic information about your financial situation. This can be especially helpful if you are in a time-sensitive situation and need to secure a loan quickly.

Get Pre-Qualified for a Loan Today!

Overall, getting pre-qualified for a loan can provide you with important information about your budget, help you negotiate better terms, speed up the loan approval process, and give you confidence when making major life decisions like starting a family.

And remember that you’re not alone in the process. You can count on our team at Daylight Grow to answer any questions you have and be your family building advocate each step of the way.

Disclaimer: The content provided on this blog post is not intended to provide legal, investment or financial advice and is not tailored to anyone’s specific circumstances. For any specific advice about your current circumstances, you may want to consult with a qualified professional. Any information or statistical data provided by Daylight Grow is used for informational purposes only. While Daylight Grow finds this information to be accurate, we do not endorse or guarantee any third-party content.