Pre-Qualification vs. Pre-Approval

Real Estate

Pre-Qualification vs. Pre-Approval

One sure way to reduce stress during the process of home buying is to seek pre-approval. Buyers who are pre-approved are taken more seriously than their pre-qualified counterparts or buyers who have not talked to a lender yet..

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. (get Pre-Approved before starting your home search)

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.

I suggest always using local lenders when getting pre-approved. They know the market and appraisers in order to get the home you want under contract and to closing quicker.  Two that I highly recommended are:

Cindy Southerland  from Guild Mortgage - Apply On Line    csoutherland@guildmortgage.net  254-760-3713

Caren Jones Hildinger from Fairway Mortgage - Apply On Line   carenh@fairwaymc.com  254-933-9500

Both companies have office in Temple, Belton & Salado