A pre-qualification is a non-binding and unofficial estimate of the amount of house you can afford. A mortgage pre-approval takes a pre-qualification a few steps further and reflect a commitment from a lender based on verified income, assets, employment, credit, and debts.
Here are a few reasons why getting Pre-Approved before you start shopping is a good idea:
- Identify any credit problems
- Credit can be tricky to manage, and small items can really trip up the mortgage process. Mortgage lenders use specific FICO scores when qualifying you for a mortgage and do not use the estimated algorithmic scores shown on web-based tools like Credit Karma. By getting pre-approved, you will be able to see exactly where your credit stands and take care of any potential issues or inaccuracies that may delay or prevent you from getting a mortgage.
- Establish your true budget
- While a pre-qualification might help you establish a range of prices you may want to shop within, a mortgage pre-approval will show you exactly how much house you are able to afford based on verified income, assets, and debts. Understanding your budget before shopping homes can save you a lot of time and headache.
- Competitive offers
- A pre-approval can be written to match your offer sheet in order to add negotiating leverage when writing a purchase offer. In hot markets like North Texas, your offer is often one of many. A strong pre-approval helps your offer stand out because it shows that the lender has reviewed and approved your profile to purchase that home.
- Show your Realtor that you are serious
- Agents often require you to obtain a pre-approval prior to investing time in you by showing you multiple properties. The best way to show your agent that you are a serious buyer and command priority attention is to come prepared and with a pre-approval letter in-hand.
Getting Pre-Approved is not a lengthy process and it can also kickstart the mortgage approval process once you are under contract on your new home. Connect with us to get started on your mortgage pre-approval today!Apply Now