Should You Get Pre-approved Before Shopping for a Home?

Buyers have many questions prior to purchasing a home and that is completely understandable. Some of the most common questions we hear are the difference between a pre-qualification letter and a pre-approval letter and what is the importance of having one. In simple terms, a pre-qualification letter is an estimate of the loan that you might qualify for based on information you have verbally given your lender. It is not a commitment to lend, but it is based on a verbal conversation. A pre-approval letter on the other hand is not a commitment to lend, but it is a stronger assurance of what you’re likely to obtain for a loan. The reason being is that you will undergo a credit check and have to provide your W-2 and tax returns to find out what you’re qualified for. This makes the pre-approval letter superior.

The importance of having a pre-approval letter is that it allows you as a buyer to focus in on homes that you can actually afford and what you can afford on a monthly basis. Having a budget planned out ahead of time gives you comfort level knowing you can meet your monthly obligation. Also, when your agent presents your offer to a seller, it gives the seller the peace of mind that you will be able to complete the transaction (especially in a multiple offer situation).

If you have any questions about pre-qualification, pre-approval, buying or selling, please give us a call at (561) 395 8418. Thanks for watching!