If you’re ready to get serious about buying a home, then you should get a pre-approval. A pre-approval letter demonstrates to sellers and real estate agents that you’re qualified to get a mortgage. It also lets you know what amount you’re eligible to borrow.
Is It Enough to Get a Pre-Qualification?
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. However, 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. While every lender has different requirements, most lenders will want to confirm your income and credit history in particular.
Whаt’s in a 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, and the loan amount you are eligible for.
Most pre-approvals are valid for 60 to 90 days, but this may vary between lenders. It will also include the terms and conditions under which the lender would be willing to lend to you. Keep in mind that a pre-approval is based on a lender’s initial assessment of your situation. Therefore, it is not a legally binding commitment. 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.
If you’re not quite ready to buy, it may be a good idea to wait before getting a pre-approval. Instead, take this time to research homes and neighborhoods in your area, improve your credit, figure out your ideal budget, and make sure your funds are liquid and ready to go. But, if you’re ready to start shopping, and we could help you secure a pre-approval today.