All home buyers need to know the importance of pre-qualification vs. pre-approval. Let us explain:
So, you are shopping around town for your new home, and all your ducks are in a row including a pre-qualified letter from your lender. Stop, do not pass “GO”, do not collect 200 dollars. This is where many people follow the wrong steps in the home-buying process.
A pre-qualification letter is like a guess because nothing has been proven yet. Though, it could give you a good idea of where you are in terms of your financial standing, it doesn’t promise that you have given accurate numbers. At this point, the lender is solely going off what you tell him/her over the phone.
Now, before you go head-first into searching for you next house, get pre-approved from your lender. Having a tangible pre-approved letter means that credit scores have been run, underwriting is in the books, pay stubs have been cleared and all other financial information has been reviewed.
You might be thinking, “Why does it matter? Why do I need this before I even start looking?”. Well the answer is, you don’t NEED it prior, but if you are looking to close on a home soon, we advise that you have it in hand.
Now that you are pre-approved, get to shopping!
