Pre-Approval or Pre-Qualify

Pre-Approval or Pre-Qualify

When starting the home buying process, many people are unaware of the difference between getting a Pre-Approval letter and a Pre-Qualify letter. Many internet lenders will give you a Pre-Qualify letter which is based on your income and debts but does not take into account your credit score, assets, or job history. So why would you want a Pre-Approval letter instead?pre approval1 First off a Pre-Approval letter from a lender means you are approved for a loan up to a certain amount as long as the home qualifies, pending inspections and the home appraises for the loan amount.

A Pre-Approval letter is issued as a commitment from the lender when the lender is certain it will lend, not like a Pre-Qualify letter which only shows what a buyer may qualify for. This is important for buyers to know before starting the home buying process. I’ve seen too many buyers make an offer on a home, only to wait two weeks or more to have their dreams and plans crushed when they found out their credit score was to low or they needed to reduce their debt to afford their dream home.pre approval3

The real benefit of getting pre-approved is that when you find a home, you’ll be able to move quickly. Once you make an offer, you won’t have to scramble for financing since you’re pre-approved.

As far as selling a home, when the market is soft, meaning there is an over abundant number of homes on the market, many sellers are willing to look at any offer. In a strong market a Pre-Approval letter adds substance to an offer presented to a seller. A seller is less likely to remove their home from the market knowing that the buyer may or may not be able to afford their home. Many times when there are multiple offers presented to the seller, the seller will always chose an offer accompanied by a Pre-Approval letter.

We have put together a short video with the help from our friends at Caliber Home Loans, and don’t forget to call us when you’re ready to start your home search.

          File-Video-icon                                                     Thanks from Windermere Arlingtonpre approval2