How much home can you afford? How do you even begin to find the answer to that question? You’ve probably heard terms like “pre-approval” and “pre-qualification” tossed around, but do you understand the critical difference between those two? If your answer is “no,” then please read on to avoid major disappointment when you make your offer.
â€œPre-qualificationâ€ is a fine place to start, but if you’re really serious about the time and money you’re going to invest in purchasing a home, you’ll really want to focus on â€œpre-approval.â€ Approval, and not just qualification, is secured when you complete and submit a loan application, along with the appropriate documentation and fees.
The lender will review your application and paperwork, and will notify you of just how much financing you can secure. Only then will you have the confidence to make your home choice and make your offer.
A pre-qualification, on the other hand, is more informal, and only an estimate of the funds for which you might qualify after applying for a loan. You might make an offer with pre-qualification in hand, but it’s no guarantee that your loan application will be accepted.
The seller’s representative will have educated the seller about this critical difference, so make them an offer they can’t refuse! Pre-approval puts you in the driver’s seat, so get ready to move!
Bennington VT, Buying