Don't Get Pre-Qualified! Get Pre-Approved
It's important to get pre-approved for a mortgage before you shop for a home, but sometimes the terminology is confusing. Learn the difference between a mortgage pre-qualification and mortgage pre-approval.
Being pre-qualified is worthless to a seller; none of the information provided to the lender has been verified and therefore can change the results of the mortgage application process. Unforeseen problems can arise such as glitches on the credit report due to any number of reasons.
Getting Pre-qualified prior to you looking for a home gives you a basic idea of the price range you can afford.
The way to present a serious offer to the seller is to get pre-approved for a mortgage, this signifies that the buyer has met all the requirements and the only thing left is the appraisal of the property. This is a very powerful weapon that works when negotiating a sale. Learn about the advantages of getting pre-approved for a mortgage before you look.
Pre-approval offers a number of advantages over waiting to apply for a mortgage until after you've found a home. You can:
· Shop for a home with the confidence of knowing exactly how much you can afford.
· Take advantage of the preference many home sellers have for pre-approved buyers.
· Find out about possible qualification problems early in the home buying process.
When you're pre-approved you can go shopping for a home with confidence about your buying power, but it still isn't a guarantee that the lender will approve the loan.
Have the lender issue a loan commitment letter after you and the home have been approved. The bank issues this letter only if it is sure it will loan you the money. If your offer has a loan commitment date in it be sure it provides time for the bank’s requirements to be fulfilled.
A home appraisal must meet the guidelines set out by the lender. One of the stipulations is that the home must be appraised at or higher than the sale price.
The price of the home is just one aspect of the home the lender considers. They also want to ensure that the property will sell within a reasonable amount of time, just in case they have to foreclose on the property.
Contact a lending institution and ask questions about being pre-approved in your home buying process.