Pre-Qualification and Pre-Approval
Pre-approval is an important first step before you begin looking for a home, and it helps you determine how much home you can really afford. Getting pre-approved requires that the lender verify your financial information, and it serves as a commitment to lend a specified amount based on that information. This gives you significant buying power with a seller who recognizes you will be approved for a loan.
What is Pre-Qualification?
Pre-qualification is an informal discussion between borrower and lender. The lender estimates the amount that you can borrow based solely on what you tell them about your income and assets. The lender does no verification and is not bound to make the loan when you are ready to buy.
How is Pre-approval better?
To a seller, a lender's pre-approval letter is considerably stronger than a pre-qualification letter. Loan pre-approval is based on documented and verified information regarding your employment, your income, your liabilities, your assets and the cash you have available to close on a home purchase. If a seller knows your financing is secure, your offer is stronger. Pre-approval also gives you peace of mind as you shop for a home, knowing that you will qualify for the proper mortgage amount.
We highly encourage you to choose a local lender when purchasing a home. The lender works closely with the title company and realtors to ensure a timely closing. Communication among these people is crucial to a successful real estate transaction. If you are in need of recommendations please reach out and we can provide you some names of lenders we use on regular basis.