What does Pre-Qualification and Pre-Approval mean?
One sure way to reduce stress during the process of home buying is to seek pre-approval. Once you are pre-approved, you are taken more seriously than your pre-qualified counterparts.
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.
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 escrow more quickly. Once you submit your credit package, most of the legwork has already been done.
Get started on your home buying journey today and beat the stress!