As an American, you will understand that your credit historyplays a large and indisputably influential role in determining the ease of which you will obtain a loan in the future. This is particularly true if you are talking about a mortgage loan. American home mortgage companies religiously check and double-check on the credit history of the loan applicant and rely on the report to decide whether the applicant should be given the loan.

Ah yes, some American home mortgage companies claim that you can get pre-approved loans very easily-but let this serve as a reminder to you-pre-approval is NOT approval-at least, not yet. Pre-approval is almost like an advertising gimmick that promises you something but not everything.

Almost all American home mortgage banks and financial institutions use two types of mortgage terms quite freely and loosely; pre-approved and pre-qualified. Despite the fact that most of us have heard this term more times in a year than we would care to admit, most of us do not know what they ACTUALLY mean.

Being pre-qualified

Being a pre-qualified American home mortgage applicant, it means that the banks have reviewed your applicaton mortgage, plucked the figures out from your statements and some rough calculations are done and they have found you befitting of a loan. This merely means that the chances of you defaulting the loan you are applying for is acceptable by their standards. Being pre-qualified does NOT mean that you will get the loan. Some people are surprised when their loan application is pre-approved and yet they get rejected in the end. When you are pre-qualified, the banks have yet to pull up and analyze your credit report or have a look at your ability to pay off the loan at the end of the day.

And pre-approved

If you are looking for an American home mortgage, being pre-approved is far better than being pre-qualified. Being a pre-qualified borrower means that the bank has taken a close look at your accounts AND your credit report and have decided that you're OK. Being a pre-approved mortgage buyer, you can NOW go shopping for your home-if you have not found one yet. But this does not mean that you are going to get the loan. There is still one more stage to go and one more thing to get approval for-the home.

Towards the end of all this checking process, the bank will still need to check whether the home you have chosen to buy (if not from a developer) is free from encumbrances. The American home mortgage bank can still tell you ‘no' if the home is not completely cloud-free. We are talking about legal cases, objections from third parties or if there are people claiming title over the home. And even if the home is completely free from encumbrances, they will check your credit history ONE LAST TIME before they decide to give you the loan-just in case your positive credit report just turned bad due to bad credit right before they release the money.

Long process? Yeah, we know.