There is a really good reason why a buyer would want to purchase a home right now. Because renting right now can be more expensive than buying. There is always a reason why someone might need to rent instead of buying, however if you can buy, now is the time. But an even better reason is because interest rates are historically low right now. What do you actually need in order to go shopping for that home? A Pre-Qualification or Pre-Approval letter. And only a mortgage lender can give you one of those. So why are these so important? Keep reading…
So, what’s the difference between a Pre-Qualification and a Pre-Approval? Quite a lot, actually. A Pre-Qualification is an “estimate” of what you could qualify for. It’s what the loan officer thinks they “might” be able to get you approved for during the Underwriting process. In a Pre-Qualification you submit your pay stubs, bank statements, W2’s and any thing else the loan officer asks for. They will also, with your permission, do a soft pull of your credit report at this time. After going over all the information they will let you know what you would qualify for if everything checks out in Underwriting. A Pre-Approval comes from the underwriter, after reviewing everything that you submitted. This Pre-Approval lets you know “exactly” what they will lend you.
But why get Pre-Qualified or Pre-Approved prior to looking for a home to purchase? Because if you find that dream home you have been wanting, you want to have a Pre-Qualification or a Pre-Approval to submit along with your offer to the seller. Seller’s are going to take your offer more seriously if they see that you have already begun the process of obtaining a loan. There is not one seller that I have ever encountered who wants to pull their home off the market for someone who may not be able to obtain financing.
Come back for my next blog. I will explain what NOT to do once you have that Pre-Qualification or Pre-Approval letter. You can mess up your approval by doing some normal everyday things without even knowing it. In the meantime, start looking for your next home on my home search website!