September mortgage rates forecast The interest rate on the most popular mortgage has fallen to…
Obtaining lender pre-approval prior to making an offer on a property can be a sound strategy when buying a home.
You’ll have a better understanding of your preliminary financing options, as well as your price thresholds when it comes to home shopping. In competitive markets, sellers are also more likely to consider serious offers from buyers who have secured loan pre-approvals, since there is a higher likelihood that the transaction will close.
Sellers may also be more willing to accept a buyer’s offer when they know that a lender has already reviewed certain credit and perhaps qualifying loan documents essential to the transaction. Lenders will usually provide a pre-approval notification in writing, which can be presented when submitting a purchase offer.
What’s the difference between pre-qualification and pre-approval?
A pre-qualification is a starting point in your search for mortgage financing. A snapshot of your financial situation is taken, which includes a look at your current income, debt, savings, and employment and residential history. All of these factors will then be analyzed to determine your loan eligibility.
A pre-approval occurs when a loan application is submitted. Based on your income, debt ratio and savings, the underwriter provides a pre-approval on an approximate loan amount you are eligible to borrow, and may also list additional documents as a condition for full loan approval.