Pre-qualified or Pre-approved for a real estate loan?
A home buyer gets pre-qualified for a real estate loan by providing the lender with basic information over the phone. Based on this, the lender provides an opinion about how much the buyer qualifies for. The lender is taking his word for it and does not pull credit or verify the information. This is a good first step to see where you’re at.
Pre-Approved for Home Loans
Getting pre-approved for a home loan is what you do when you are ready to look at homes and buy one. The lender pulls your credit and verifies your income, liabilities and savings and you fill out an application. The next two steps after this are to find a house and get a contract on that house.
The advantage of being pre-approved over just being pre-qualified is that you are a stronger buyer. The Realtor that represents you wants this because the Seller's Realtor and Seller will be more confident that you can buy their house. This gives you strength when making an offer and gives you the following advantages:
• The buyer can close faster if needed. This can sometimes help in negotiating a slightly better price or winning if there are multiple offers.
• If more than one offer comes in on a property and the other buyer is not pre-approved, the Seller's real estate agent and Seller will most likely go with the stronger, pre-approved Buyer other things being equal.
• Remember that when negotiating an offer, there is more than just price involved. Although price is a big one. |
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