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Being Pre-Approved is Better than Being Pre-Qualified!
You’ll often hear real estate experts tell buyers that it's critical to apply for a loan before shopping for a home, and it's true; this is an essential first step. Getting pre-approved determines the maximum priced home you will be able to purchase as well as what your maximum monthly payment can be. By knowing this, it saves time and heartbreak as too often, a client falls in love with a home only to find later on that it is out of their price range.
More importantly, getting pre-approved is a written commitment by the lender to give you a mortgage loan. It is a written commitment by the lender to loan you money. The preapproval letter clearly states that as long as the home appraises for the necessary amount and your financial situation has not changed from the time the pre-approval was given, the lender will give you the mortgage loan.
In essence, the pre-approval letter assures you that your loan is virtually guaranteed.
Why Is Getting Pre-Approved Important to Sellers?
In order to understand why getting pre-approved is important to a seller, you have to look at it from their point of view. Sellers understand that most buyers will need a loan in order to purchase a property as not many can pay for a home in cash. Most sellers do not want to go under contract with someone prior to the buyer getting pre-approved because once the contract is signed, the buyers still has a week or two to try and get the loan. As there is no certainly at all whether they will even qualify for a loan let alone get pre-approved for an amount necessary to buy the home, sellers may reject your offer until you get pre-approved.
If that happens, you stand the chance of losing the home of your dreams to another buyer who is already pre-approved. Why? Again, you have to think like the seller. Imagine an offer is presented to the seller from a buyer who is pre-approved. The agent representing the seller knows the pre-approval basically means the loan is guaranteed. This buyer has a huge advantage when competing against buyers who do not have pre-approval in hand.
Why Being Pre-Qualified Is Not Enough
 There is a huge difference between being pre-approved and being pre-qualified. Getting prequalified holds NO GUARANTEE AT ALL THAT YOU WILL GET THE LOAN! Getting pre-qualified really holds no weight at all as the letter simply states that you are likely to get a loan approved, however, there is no guarantee that you will. Knowledgeable sellers know this and treat a buyer who has been pre-qualified basically the same as one who has not even contacted a lender yet. It just doesn't offer much leverage or guarantee from a sellers perspective.
So what does this all boil down to??? Make sure you get pre-approved rather than pre-qualified for you loan!
As your agent, I will put you in contact with a number of local lenders that I work with to help you get pre-approved. It costs you no money and only takes about 15 minutes on the phone. Items considered when getting pre-approved for a mortgage loan include:
- Employment History
- Credit History and Scores
- Monthly Income and Expenses
With the assistance of my recommended local lenders, together, we will help you make an informed decision as to the type of loan you'll want. There are many different types of loans to consider - FHA, VA, USDA and Conventional. I guarantee we’ll find you the best lender to fit your individual situation so give me a call today at (910) 787-2160 or send me an email at joanne@joanneflick.com.
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