Preapproval vs. Prequalification

Preapproval vs. Prequalification
When you’re buying a home for sale in Ellicott City or one of the nearby cities, your real estate agent will likely tell you that you need preapproval from a lender.
But how is preapproval different from prequalification, and why do you need it?

Preapproval vs. Prequalification

Preapproval is a process you have to go through with a lender. It requires you to submit documents that prove your income and debt, and the lender will verify what you’re saying to extend an offer for you to apply for actual loan approval. Think of it as mortgage approval lite.
Prequalification doesn’t require any verification. It just means your lender has pulled your credit score but hasn’t verified your financial situation.

Why Do You Need Mortgage Preapproval?

When you’re buying a home, you need a preapproval letter from a lender. It’s a good idea to get preapproved before you even start house-hunting – and here’s why.
A preapproval lets you know just how much money your bank is willing to lend you for a home. That means you won’t look at homes outside your price range – and it helps you zero in on the features and amenities you need from a house that fit within your budget.
Even more importantly, though, is that when you find a home you love, your real estate agent will tell you to pounce on it. Chances are that if you love a home, someone else does too – and if you take too long to make an offer, you risk losing it to someone who was in a bigger rush than you were.
When you make an offer on a home with a preapproval letter from a lender, the seller can take you seriously. He or she knows that a bank is willing to lend you the money to buy the home, which means your offer is more likely to be accepted than it would be if you weren’t preapproved. If you’re up against another buyer who isn’t preapproved, the seller would be wiser to accept your offer and not the other one.

Are You Buying a Home in Ellicott City?

If you’re ready to buy a home for sale in Ellicott City, we can help you find the right one.
Call us at 410-465-5822 to tell us what you want from your next home or to schedule a tour in a home you’ve seen online.
Use these links to check out the hottest listings:

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Published On: May 5th, 2019Categories: MortgagesTags: , , , , 446 wordsViews: 316

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