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Today, we're going to talk about the difference between a pre-approval and a pre-qualification.
A pre-qualification is a good start when you're looking for a home. A lender takes the information you give them and lets you know what you should be approved for.
When we represent sellers, we don't accept offers just because of pre-qualifications. We want a buyer with a pre-approval. The lender has pulled a complete credit report and verified your income. Say you think your annual income is $100,000, and the bank discovers that $20,000 of that was from a bonus or overtime work. That would affect the amount you are approved for.
When you are pre-approved, your credit history has been examined for judgments, bankruptcies, foreclosures, etc. It is a much more in-depth process because the lender also looks at bank statements. If you have a lot of insufficient funds notifications, the bank won't want to finance your home purchase.
Pre-approvals are important for buyers and sellers. Sellers want to make sure that the buyer is in a position to buy a house before they pull their home off the market for 30 to 60 days. A pre-approval makes you more attractive in the eyes of the seller.
If you have any questions about today's video, or about real estate in general, give me a call or send me an email. I look forward to hearing from you!
