DigitalBuddyIf you don’t want to, unnecessarily, waste, either your own time, or a real estate agent’s. it’s important to be prepared for the up – front, necessities, of the home – buying process, from the beginning! Since, for most of us, the value of our family house, represents our single – biggest, financial asset, you should proceed, smartly, effectively, efficiently, and prepared! When you find, that perfect – home (or at least, you perceive it, as such), those, who have already been pre – approved, for financing/ mortgage, are at a competitive advantage, over the competition! However, many do not realize, being pre – approved, is not the same as pre – qualified (and/ or, vice versa)! With that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, the differences, and other relevant considerations.
1. Pre – approval: When one receives, pre – approval, homeowners understand, he is a qualified buyer, and any offer, he submits, will, generally, be given, far more consideration, than if he wasn’t! This process is more time – consuming, than, getting a pre – qualification, because it requires, submitting, much of the same documentation, as when one, one applies for the actual mortgage. Some of these documents include: 2 years, tax returns, and back – up forms (such as W – 2, etc); permitting/ authorizing a comprehensive Credit Report; producing supporting information, which proves ability to pay down – payment, closing costs, and reserves requirements, etc. The advantage is, one can proceed, with far more confidence, and knowledge, so he knows, and understands, how much, of a loan, he qualifies for (or if he won’t qualify), and sometimes, also locks – in, many of the advantageous terms for a stated period. Also, when a homeowner, sees proof of this, he will generally consider, your offer, if competitive, to be, more in his best interests.
2. Pre – qualifying: Many home buyers, who don’t realize and recognize, these differences, believe they are preparing, properly, when they get a pre – qualification. This process differs from the one, above, because, it only requires, filling out a form, which provides the lending institution, with certain financial information, and, if the provided information, would qualify you, a pre – qualification, letter may be provided. However, since, this is done, without verification, when the time comes, to apply, for a mortgage, you are not, automatically, approved!
When, you proceed, with, either the first, or second approach, the house, you choose, must also qualify, meaning, be worth, what you are paying for it. The lending institution does an appraisal, in order to protect them, and be certain, you comply within stated limitations, etc. Those, who provide wisely, and in a prepared manner, have the best options, for a happy ending!