Home Buying Tips in Murrieta, CA: What’s better - Being Pre-Qualified or Pre-Approved to Buy a Home?

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Real Estate Broker/Owner with 3B Realty: 951-347-3818, CA DRE# 01864774
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Home Buying Tips in Murrieta, 92562: What’s better - Being Pre-Qualified or Pre-Approved to Buy a Home?

So which is better, being pre-qualified or pre-approved? To answer that, here's a little insight into the differences between the two.That’s a question I occasionally get from home buyers just starting their search for a new home in Murrieta, CA.

So which is better, being pre-qualified or pre-approved? To answer that, here’s a little insight into the differences between the two.

Getting pre-qualified is the initial step in the home loan process, and it's generally fairly simple. It can be done over the phone or on the internet, and there is usually no cost involved. More importantly, it does not include an analysis of your credit report. In essence, the lender who pre-qualifies you assumes the financial information you share is accurate, and does not verify your information.

In contrast, getting pre-approved tends to be much more involved. You fill out a home loan application (typically for a fee) and provide the lender with documentation that allows them to perform a thorough investigation of your financial background and current credit rating.  To get pre-approved, the lender needs to verify all of your information.

The advantage of being pre-approved is that the lender provides you with a conditional commitment in writing for an exact loan amount, which lets you know the highest price you can afford to pay for a home. Plus, it gives you an advantage in the eyes of potential sellers, because they know you're one step closer to obtaining an actual home loan.

So which is better, getting pre-qualified or pre-approved?So which is better? When you're just starting the home buying process—searching the Internet for homes or condos, as well as the neighborhoods you may want to live in—but aren't ready to buy just yet, then getting pre-qualified is better because it gives you an idea of how much home you can afford.

When you're ready to buy—you’ve zeroed in on the neighborhood you want to live in and are ready to start making offers—then getting pre-approved is better. By getting pre-approved, you will know exactly how much money a lender will loan you. Plus, when you find the home of your dreams and make an offer, the home sellers will know that you can afford the home and that your offer is serious.

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 Serving home buyers and sellers in Murrieta with homes for sale, foreclosures, REO‘s, & short sales.Content provided by Bill Burchard
3B Realty

Serving the real estate needs of Southern California home buyers and home sellers.

Willaim Burchard, Broker, REALTOR®
 DRE# 01864774
Cell: 951-347-3818
Email: 
Bill@my3BRealty.com`

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Rainer
144,389
Victor Zuniga
Berkshire Hathaway Home Services California Properties - San Diego, CA

if a buyer is truly serious about buying then he/she should just get pre-approved to have that letter to submit with their offer.

Feb 01, 2011 10:58 AM #1
Rainer
71,001
Andres Munar
Keystone Alliance Mortgage - State College, PA
Experience The Difference

Great explaination in laymens terms Bill! I do give verbal pre-qualifications but always let the buyer know that their income and assests must match what they told me!

Feb 01, 2011 12:54 PM #2
Rainmaker
354,182
Melanie Ross
Coldwell Banker Solano Pacific - Benicia, CA
Benicia CA & Vallejo CA Real Estate, 707-319-2828

Fantastic explanation that hits the nail on the head...get pre-approved. 

Feb 01, 2011 01:37 PM #3
Rainmaker
1,421,176
Bill Burchard
3B Realty: 951-347-3818, CA - Murrieta, CA
Broker, Realtor, Representing Buyers and Sellers

Hello, Victor. I completely agree with you. A pre-approval letter is a very powerful component in a buyer’s offer. It truly lets the seller know that the buyer’s offer is solid.

Good evening, Andres. Thank you so much for the compliment. Providing clients with a verbal pre-qualification is an excellent first-step in the home-buying process. The pre-qualification lets them know what they can afford.

Hi Melanie. Thanks for the compliment! I’m glad it’s clear and concise. (I really appreciate getting others’ feedback because, though what I write may make sense to me, it needs to make sense to those whom I’m communicating with.)

Feb 01, 2011 02:06 PM #4
Rainer
253,709
Anna Dovger
Add Value Home Staging LLC, 281-704-6607 - The Woodlands, TX
Home Staging -The Woodlands, TX

Great explanation, Bill. I didn't know that there is a difference;-)

Feb 02, 2011 01:50 AM #5
Rainmaker
1,421,176
Bill Burchard
3B Realty: 951-347-3818, CA - Murrieta, CA
Broker, Realtor, Representing Buyers and Sellers

Good morning, Anna. I’m glad my post was informative. (And thanks for the complement!)

Feb 02, 2011 02:43 AM #6
Rainer
77,497
Jason M. Keith
Caliber Home Loans - Parker, CO
Equal Housing Lender

Hello Bill,  Good post.  I like how you broke this down in an easy to read explanation.

Feb 02, 2011 08:49 AM #7
Rainmaker
1,421,176
Bill Burchard
3B Realty: 951-347-3818, CA - Murrieta, CA
Broker, Realtor, Representing Buyers and Sellers

Hi Jason. Thanks for the complement!

Feb 03, 2011 12:12 AM #8
Rainmaker
1,116,466
Jim Frimmer
HomeSmart Realty West - San Diego, CA
Realtor & CDPE, Mission Valley specialist

“Pre-qualified” and “pre-approved” might be the two most misunderstood terms in real estate.

Feb 03, 2011 02:21 PM #9
Rainmaker
1,421,176
Bill Burchard
3B Realty: 951-347-3818, CA - Murrieta, CA
Broker, Realtor, Representing Buyers and Sellers

Hi Jim. I agree, they can be confusing. They way I try to help my home buyers remember the difference is by saying, “Just because your qualified to do something, doesn’t mean your approved to do it. For example, attorneys go to school to become qualified to practice law, but they have to pass the bar exam to be approved to practice.” In other words, first you meet the qualifications, then you get approved. It seems to help.

Feb 04, 2011 08:29 AM #10
Rainer
478,183
Not a real person
San Diego, CA

I’ve never really understood why they even have pre-qualification. Why not just skip that step?

Feb 05, 2011 04:56 AM #11
Rainmaker
1,421,176
Bill Burchard
3B Realty: 951-347-3818, CA - Murrieta, CA
Broker, Realtor, Representing Buyers and Sellers

Hi Russel. You have my vote!

Feb 06, 2011 05:35 AM #12
Rainmaker
1,495,077
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • Green • GRI • HAFA • PSC Calabasas CA

Buying a first home in California can be a daunting task, as the average home price is roughly two-and-a-half times the national average in the Golden State.

Jun 11, 2016 04:56 PM #13
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Rainmaker
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Bill Burchard

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