First off, lets set one thing straight: A Pre-Qualification is NOT the same as a Pre-Approval.
So what is the difference?
A pre-qualification is an estimate based solely on a buyer’s self-stated income to give an idea of how much home they can afford.
A pre-approval results from lenders pulling credit and other information to determine a more accurate picture of what a buyer can afford.
Both are letters from a lender giving a sense of a buyer’s purchase power, however a pre-approval is a more detailed assessment of how much of a loan one qualifies for based on specific guidelines.
What A Pre-Approval Is Not
It is not a guarantee that your mortgage will actually be approved.
It does not lock in a rate or require you to commit to a particular loan type.
It is not a requirement you work with the same lender who provided your pre-approval.
Why Get Pre-Approved?
Determine Affordability – It indicates how much you are eligible to borrow, which helps you determine how much house you can afford. No sense looking at a Ferrari if you can only afford a Jeep, right? (Sure, it is fun to test drive though)
Gain Negotiating Power – A pre-approval shows listing agents and sellers that you are a credible and motivated buyer, which helps you stand out in a competitive (seller’s) market. You will be seen as more than just a looky-loo.
Move Fast – It gets you closer to locking a loan and closing on a house in a shorter amount of time. In today’s market this is more important than ever as shorter timelines are an important part of a strong offer.
Avoid Surprises – Pre-Approvals give you visibility into your credit worthiness in a lenders eyes. It helps your loan officer to guide you step by step through the pre-approval process.
What You Need To DO
The first step to getting pre-approved is to connect with a lender. (I can help with that)
Provide your lender with information to help them determine the loan amount for which you can be pre-approved.
Your credit report will likely be pulled to verify your credit score.
Your information and credit worthiness will be reviewed and if you meet the lender’s qualifications, you will be issued a pre-approval letter confirming the loan amount you qualify for.
Need help getting started? Let me know! I work with exceptional lenders who have a wide range of solutions available. I can make an introduction whenever you are ready, it costs nothing to begin the process and receive your pre-approval! Find out how much home you can afford today firstname.lastname@example.org