Today’s Pro Talk is about the first step buyers need to take to purchase a home. We recommend that you have an idea of your purchasing power and how much of a home you can afford. You need to apply for a loan with a financial institution to find out how much money you will receive as a loan. Having a letter from a lender with a predetermined loan amount, will help you not to waste your time looking at homes which will not fit your budget.
There are two such letters provided by the lenders, pre-qualification and pre-approval. We will explain the difference between Pre-Qualification and Pre-Approval letter.
Getting pre-qualified for a loan is a very easy process. You provide the lender approximate income, the amount of debt you have, your work information, and any other details from your credit history. The lender uses this information to calculate how much money you are eligible to receive.
The pre-approval letter is more involved than pre-qualification process. The reason being, you will have to fill out a loan application and provide necessary documentation. The lender will examine and verify your financial situation including your credit report, your employment history,and your income and decide how much you can borrow and what rate to offer you.
Benefit of pr-eapproval letter: It not only provides you with peace of mind and more certainty to borrow money but also increases your purchasing power. As an experienced Realtors,We don’t recommend to use pre-qualification letter as a tool to start the buying process.
As part of our services, we have access to lenders with different loan products and we can recommend one to you depending on your financial needs and situation.
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