Q: WHAT'S THE DIFFERENCE BETWEEN A PRE-QUALIFICATION AND A PRE-APPROVAL?
A pre-qualification does a very quick skim of your credit report, with a rough estimate of your income and your debts. What it doesn’t do is factor in your ACTUAL Debts, Income and qualifying income, so it’s not a VALID pre-approval. After knowing what a pre-qualification is and you’re the seller, what are the odds of you accepting an offer with a pre-qualification letter compared to a pre-approval letter? Probably not, right?
A pre-approval not only goes through the process of making sure you can afford the home you’re looking for but it also looks for anything that may keep you from closing on the home, we call these loan BOMBS. If you’re not pre-approved, What could happen is that you spent the last month shopping and getting a house under contract and then find out on the last week you can’t even close on the house.
You absolutely need to be pre-approved, so you aren’t wasting your time and getting your hopes up and to improve your negotiating power, when making an offer.