There are three primary benefits of being pre-qualified for a mortgage before beginning your home search.
1.Helps you to understand your true buying power – Knowing your buying power and how much you can afford is critical before shopping for a home. Doing so will help you to focus on searching for homes in areas and price ranges that you can afford.
2.Real estate agents prefer to work with prequalified buyers – A real estate agent’s time is extremely valuable especially when they are balancing many clients and their personal time. Agents will not spend time touring homes with buyers unless they know the buyers can afford to purchase a home.
3. It shows sellers that you are a serious and qualified buyer – Home buyers have a better chance of having their offer accepted if they are already pre-qualified for the mortgage amount needed to purchase the home. This is especially important when other buyers are making offers on the same house.
FYI, there are two very distinct differences between being pre-qualified and pre-approved for a mortgage.
When you are pre-qualified, the loan officer will gather your income and asset information, pull your credit, and then submit your scenario into the desktop underwriting system for a system approval. Then, the loan officer will issue the pre-qualification letter for you to submit to your real estate agent.
When you are pre-approved, it means your file was actually submitted to underwriting which is a more reliable approval in the event the loan officer misinterpreted the guidelines.
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