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 July 17, 2007

The Difference between Loan Pre-appovals and Pre-qualifications
Confusion surrounding the proper understanding of pre-approvals and pre-qualifications is importance to successful sales and purchases of property. Real estate experts agree that it is both important and smart for buyers to become pre-approved- not just pre-qualified prior to entering the housing market.
In order for buyers to obtain pre-approval status, they must first submit a formal loan application along with the required fees and documentation. Once the lender processes the application, the applicant will be notified as to the amount of money they are approved to borrow. Once the buyer has that information, they can then enter the housing market with a higher level of confidence, knowing how much home they can afford to buy.

On the other hand, pre-qualifications are only an estimate of what the buyer can afford to buy. Buyers should not simply assume that a pre-qualification estimate is completely accurate and go home shopping. Prospective home buyers must keep in mind that pre-qualification is not a guarantee of loan approval, and should avoid placing offers on homes without being fully pre-approved. Buyers could be setting themselves up for disappointment if they do not have all their information in order. They could only wind up wasting their valuable time as well as the time of their real estate professional.

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