Skip to main content

Understanding Pre-qualification and Pre-approval

 

Buyers ask me all the time what the difference is between Pre-qualification and Pre-approval. If you are considering the purchase of a new home or selling your home, you may be concerned with the issue of finance. If you are a buyer obtaining the right mortgage is a key step in the home buying process, but it does not have to be a stress inducing one. Talk to your lender before you make an offer. Most lenders offer pre-qualification, pre-approval, or both to help you know where you stand. Get Prequalified and be up front about the source of your down payment money. A good lender will explain the true costs of borrowing to you so you can comfortably afford the home you want as well as the monthly payments. Sellers should always ask if a buyer that wants to see their house is already pre-qualified.
Pre-qualification: Is a preliminary estimate of how much you can afford to pay for a home based on information you provide. Because credit and employment information are not validated for prequalification, it can only be considered a rough idea of a monthly mortgage payment and loan size. This can be a useful guide as you begin the home buying process. Pre-approval for a loan amount is better than pre-qualification.

Pre-approval: Is a written commitment from a lender to finance your home purchase up to a set amount. This indicates that the lender has taken a close look into your financial history and has agreed to lend you a specific amount of money, hinging on certain details like a finalized sales contract and professional inspection. Pre-approval indicates to sellers that you are a serious home-buyer. Regardless of which option you utilize, or even if you take both steps, you will be able to shop with much more confidence.

 

The Benefits of Pre-Approval

  • Pre-approval, as opposed to Pre-qualification, signifies that the loan application has been taken through a rigorous procedure.

  • Here’s why Pre-approved buyers are ahead in the home buying game:

  •  If you make an offer on a home and then apply for a loan, you are at the lender’s mercy, who is aware that you do not have time to shop around.

  • Pre-approval saves time spent looking at houses you cannot afford.

  • A Pre-approval letter from a lender gives you an edge when multiple offers have been made on a house.

  • Pre-approved buyers can generally close escrow more quickly since most of the work has already been done.

  • Real estate financing is available from many sources, an experienced real estate professional I can suggest lenders with a history of offering excellent mortgage products and services. 

If you are Serious About Buying- It is Time to Get Pre-Approved.

 

Want to learn more? Let us talk! 

Valerie Bomberger, ABR Michigan Realtor

Mobile /Text (269) 208-4750

Email valeriebomberger@remax.net

 

Labels:

Comments

Post a Comment

Popular posts from this blog

REALTOR’s ® Find A Way To Tackle Discrimination

In Part 3 of discrimination in real estate        I want cover the  One America Principles.      These principles were  created by the Department of     Housing and Urban Development ( HUD ) in 1997.  The information on One America Principles is long  but is very important to all buyers.     Here is a list of  principles that I follow:I welcome you and want to do business with you. I will base my decision and opinions of you on who you are, not on any preconceived stereotypes or ingrained value judgments. I subscribe to the federal Fair Housing Act and its principles. I embrace and celebrate the strength that diversity brings to our communities and our nation. I will help you find opportunities to buy the home you choose. I will market home ownership to the public and reach out to people who may not know that home ownership is a realistic option. I will make sure you know there is a full range of housing choices available to you and encourage you to consider all communities an
Post a Comment
Read more

Getting your ducks in a row before you start house hunting

  I have spent over 25 years helping buyers find their right home. I can help you find your right home. I have years worth of helpful information on my website for you to explore. Even if you have bought a home in the past this information might be of interest. I cover mortgages, hiring an agent, free home searches and much more. If you have any questions just ask .
Post a Comment
Read more

Fair Housing Declaration Part 4 of 4

  Part 4 of my series on discrimination n Real estate is about the Fair housing Act. This shows buyers and sellers the dos and do n0t's, rights and penalties under the law. It is a important law that guarantees that no one can refuse to sell or lease property to anyone because of race, color, religion, sex, handicap, familial status, sexual orientation, gender identity and national origin. Please checkout the whole Fair Housing Act with the United States Department of Justice. I have included some excerpts from the ACT. Sec. 805. [42 U.S.C. 3605] Discrimination in Residential Real Estate-Related Transactions (a) In General.--It shall be unlawful for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin. (b) Definitio
Post a Comment
Read more