Pre-Qualification vs. Pre-Approval
When you decide to start with the process of purchasing a property, the first step is meeting with mortgage professional of your choosing. Or if you do not have a favorite one, I can definitely recommend one.
One sure way to reduce stress during the process of home buying is to seek pre-approval. Buyers who are pre-approved are taken more seriously than their pre-qualified counterparts. Sellers main issue is if you qualify to buy their home.
Pre-qualification is not a loan commitment from a lending institution; it is only a loan agent’s opinion that you will be able to obtain financing. Virtually anyone can achieve pre-qualification status. Pre-approval, on the other hand, signifies that the application has been taken through a rigorous procedure. Pre-approved buyers enjoy these benefits:
1. If you make an offer on a home and then apply for a loan, you are at the lender’s mercy. He sets the interest rate and points, aware that you do not have time to shop around.
2. Pre-approval saves time spent looking at houses you can’t afford.
3. If you rely on your lender to tell you what you can afford, you may end up with a high mortgage payment. Most people can qualify for more than they feel comfortable paying. Always determine beforehand the monthly mortgage amount you feel comfortable paying.
4. Having a pre-approval letter from a lender gives you an edge when multiple offers have been made on a house.
5. Pre-approved buyers can generally close on a property more quickly. Once you submit your credit package, most of the legwork has already been done.