It’s a good idea to be pre-approved for a mortgage before you begin house hunting. In fact, many realtors won’t even work with you until you’ve gone through this process. There is a bit of confusion out there though, about the difference between pre-qualification and pre-approval. Many times these terms are used interchangeably, but they are, indeed, different. Pre-qualification is basically a letter from a loan officer saying how much they believe you will be able to borrow based on your income, debt, work history, etc. Pre-qualification is given without pulling credit scores, and is a “good faith estimate.” However, even if you are pre-qualified you can still have trouble with your financing, since nothing about a pre-qualification is guaranteed.
Pre-approval takes everything a step further and involves pulling your credit report (which typically involves a small, non-refundable fee). This process involves a lot more paper work, but shows that the bank is ready to work with you should you find a home that you love. It is important to note that pre-approval does not guarantee a mortgage, but it does guarantee that the bank is ready and willing to work with you which shows that you are a serious buyer.
Many realtors will work with you if you are pre-qualified, but it is really in your best interest as a buyer to be pre-approved before you start the house hunting process. It is heart breaking to fall in love with a home and then find out that it is way over your budget when you try to finance it. When you’re ready to start house hunting, shop around for a mortgage and find a broker that you like and trust. Once you have your pre-approval letter it shows your agent and the sellers that you are a serious buyer worth working with.
Thinking of buying of selling a home in Sussex County? Give us a call at Cooper Realty Associates and put us to work for you – 302-644-2266.