San Ramon Home Buyers – Do You Know the Difference Between A Pre-Approval & Pre-Qualification

In this hot market, a mortgage prequalification is not as powerful as it once was. Sellers and real estate agents are more inclined to accept an offer from a buyer who has a pre-approval  over a pre-qualification, especially if there are multiple offers.

Pre-Qualification is generally what the borrower discloses to the lender, i.e. income, assets, monthly obligations, funds to close. Sometimes the lender will pull a credit report, but not always.

Pre-Approval is where the lender verifies the information the borrower provides, has the buyer complete a loan application and submit to the lender all the documentation necessary to get a mortgage. The advantage of this is once the buyer is under contract on a property, the only missing item is the appraisal.

With the preapproval process complete prior to shopping for a home, it is feasible to close escrow within 30 days. The pre-approval provides the buyer with the exact dollar amount they will qualify for to purchase a home and provides the would be seller with the assurance the loan will go through.

When negotiating a purchase contract, price is not always the determining factor to get your bid accepted. Terms such as buyer qualification and how quickly the transaction can close are other elements that make one offer stand out from the competition.

Bottom line - be prepared. Don't go shopping for a home without your pre-approval letter in hand.