Pre-Approved vs. Pre-Qualified

It’s not too difficult to be pre-qualified. With a stable job and a credit history, many lenders will pre-qualify you for a certain amount over the phone. They take your financial information on faith, without investigating.

A Mortgage Invites Financial Scrutiny

But pre-qualified is a long way from having a mortgage in hand. Mortgage lenders are much more thorough than a credit card company. You must prove your employment, disclose the source of your down payment, and generally answer for every financial move you’ve made.

It takes time to get approved for a mortgage Ñ as long as two weeks to collect and share all the paperwork, sometimes. When you want to make an offer on a house, two weeks can feel like an eternity.

Get Pre-Approved

Therefore, I truly, strongly, and urgently recommend you go through the pre-approval process early on. This means you’ve done all your homework with the lender, and they’ve pretty much agreed to lend you a certain amount at a certain rate.

Pre-approval allows you to focus on finding the right house and getting the best price, not on wondering if you can afford it.

Pre-Approval Carries Weight

Pre-approval letters tell buyers that you’re a legitimate buyer, and the sales process won’t be slowed up as you seek financing.

With pre-approval, we can negotiate more forcefully with the seller. This is especially helpful and effective for nice homes in good locations with multiple offers.

A Couple of “Gotchas!”

Pre-approval letters aren’t necessarily binding. They carry a lot more weight with buyers — LOTS more weight — but approval will still depend on the home’s appraisal.

Also, after you get your pre-approval, don’t make any big financial changes like new cars or major credit card purchases.