Pre-Qualification vs. Pre-Approval for mortgage loans
>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.
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 prequalification
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.
2. Pre-approval saves time spent looking at houses you
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.
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