Why Get Pre-Qualified or Pre-Approved for a Loan?
- Pre-qualification serves as a dry run of the loan application process. A mortgage lender will use details you provide about your credit, income, assets, and debts to arrive at an estimate of how much of a mortgage you can afford. The whole process may take only minutes or a few hours at most, and is free.
- Pre-approval is the actual first step of applying for a loan. It requires that you submit documents to a lender and that he or she run a credit score check. If you are in a competitive situation, being pre-approved verses pre-qualified can put you in a superior position to someone who is merely pre-qualified.
- While a "pre-qual" is non-binding to the lender (because the information you provide has not been verified), it does serve as a good indication to potential sellers of your general creditworthiness
- These days most sellers will NOT accept an offer without at least a pre-qualification letter so if you are serious about buying, this is the first step towards getting you in your new home.