Financing Your Home Purchase - Why Get Pre-Qualified?
Pre-qualification acts as a dry run of the initial loan application process. The mortgage lender will use details you provide about your credit, income, assets and debts to arrive at an estimate of how much mortgage you can afford. The whole process takes very little time, and is free. Many lenders have online applications to speed it up, and make it 24/7/365.
While a "pre-qual" is non-binding to the lender (because the information you provide has not been verified), it does serve as a good indication to potential sellers of your general creditworthiness. And the process will help you confirm your ability to purchase a house in the price range you had in mind.
These days, however, most sellers, at the recommendation of their agents, are looking for a verified approval, referred to as a pre-approval letter. A Pre-Approval represents to the seller that you're information has been verified, that you are able to purchase, and that you are serious enough about buying to go through that process. When you show sellers that you're serious, and your offer stands out.
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