Why You Should Get a Pre-Approval

You’ve been shopping the market for a while now, and you’re ready to get committed. What better way to do that than to show up with a pre-approval letter that shows sellers and real estate agents you’re prepared to put your money where your mouth is.

Is It Enough to Get a Pre-Qualification? Or Do I Need to Get Pre-Approved Too?

It’s important to understand the difference between a pre-qualification and a pre-approval. Pre-qualifying only requires an initial screening and gives you an estimate of what you can afford based on general information. A pre-qualification is a good first step towards figuring out what you are eligible for, but it won’t hеlр muсh іn уоur efforts to seal the dеаl on that home.

 

A mortgage pre-approval goes a step further. It means that a lender has stated in writing that you are qualified for a loan with specific terms, based on their initial assessment of your situation. While every lender has different requirements for evaluating your eligibility, typically, they will want to confirm your income and credit history before issuing the document. 

 

Whаt’s in Mortgage Pre-Approval Letter

A typical pre-approval letter wіll include your name, the date it was issued, the length of time it will be valid (usually between 60 and 90 days), and the maximum purchase price of a home that you are eligible for. It will also include the terms and conditions under which the lender would be willing to lend to you.
While a pre-approval letter confirms the lender’s initial assessment of your eligibility, you should know that it is not a legally binding commitment to lend to you. Moreover, if an interest rate is included on your pre-approval, there is no guarantee that the lender will be able to honor that same rate when the time comes for you to close your loan.

 

 

If you’re not quite ready to “put a ring on it,” it may be a good idea to wait before getting a pre-approval. After all, the document is only valid for a maximum of three months, so you want to make sure you’re ready to buy before you secure it. If you’re not quite there yet, you could take this time to research homes and neighborhoods in your area, work on improving your credit, figure out your ideal budget, and make sure your funds are liquid and ready to go for whenever you become ready.

 

However, if you’re ready to start shopping, get in touch with a mortgage consultant and we could help you secure a pre-approval today.