Pre-Qualification vs. Pre-Approval
Identify your property price range, and strengthen your bargaining power by understanding the difference between these two buyer tools.
“How do I know what price range to look in,” and “how do I make sure my offer is accepted?”
These are two of the most commonly asked questions from first-time and experienced home-buyers alike.
Some lenders offer pre-qualifications and pre-approvals. Here’s the difference:
• Provides a “ballpark” estimate of your buying power.
• Is based on summary information of your income and assets. Requires a satisfactory review of property, financial documents and program requirements to issue final approval.
• Is offered by most lenders.
• Provides proof to real estate agents and sellers you’re pre-approved for a specific loan amount.
• Is based on verification of your income, credit and assets.
• Does not require a satisfactory appraisal and title review until under contract.
One of the best places to start is by getting pre-approved by a lender up-front in the process. Not only does it give you peace of mind knowing your price range is already pre-approved by the lender, but strengthens your position at the negotiating table, especially in a multiple offer situation.