Are you a buyer or a seller?
Knowing the difference between a mortgage per-approval and a pre-qualification can save you money!
Whether you area buyer or a seller of real estate, I am sure you have heard of pre-approvals and pre-qualifications…You probably said to yourself qualification-schmualification…Same thing…well…not really.
So, let me spell it out in very simple terms.
Theoretically, they are both bank letters telling the world that the bank is willing to lend you money for your new home purchase.
Are you a Buyer?
The pre-qualification is a preliminary document that may not open too many doors for you except it may get you inside your agent’s car and he/she may start showing you properties.
Now, if your agent is savvy, they may explain to you that you need to take it to the next level and get a pre-approval in order to have a chance to negotiate from a winning position.
So, check out my video with a more animated explanation:
So, in a nutshell, here is what the lender is going to ask for:
- 1. 2 years worth of tax returns
- 2. 2 months worth of bank statement
- 3. they will want to check your credit score
- 4. they will want to have access to information about all your assets.
They will give this info to their underwriter and the underwriter will give you the green light to start moving forward making offers…
This is the closest you can get to making a cash offer.
So, the further you are in the loan approval process, the better chances you have for the seller to want to negotiate with you and even get a better price and better terms on the contract.
Are you a Seller?
If you are a seller, the difference between pre-approval and pre-qualification is just as important to you becasue if you get an offer on your property from a buyer without a pre-approval, you may have the unpleasant surprise, 1 or 2 or 3 weeks later to find out that your buyer doesn’t actually qualify for the loan. So, you will have to terminate the contract, put the property back on the market and now everyone will wonder what is wrong with your place and why didn’t it sell. Not a pretty picture.
So, be sure that you and you agent are doing your due diligence and do not invite fiascos in your life.
If you Fail to Plan, you Plan to Fail.
And here are the DONTS during the mortgage process.
- 1. DON’T change jobs, become unemployed or up and quit your job.
2. DON’T unless you are planning to live in it, do not buy a car, a van, a truck or a barge
3. DON’T spend your down-payment…really? I shouldn’t have to say that…
4. DON’T overuse your credit cards…don’t buy furniture, lighting fixtures, rugs etc, etc…wait until you have the keys in your hands…
5. DON’T start any other finance applications, don’t consolidate debt and don’t start new credit cards.
6. DON’T make large cash deposits without proper paper trail
7. DON’T change banks
8. DON’T BUY A FERRARI
Other than that…you should be good to go…
Call me with any questions: 239-404-7576
