Pre-qualification vs. Pre-approval
Buyers, often in haste to get an offer in, don't always understand the difference and many times come with a Pre-qualification letter. So what exactly is the difference and why does it matter?
Pre-qualification
This type of letter takes the information you give the bank about your income and bills and gives you a letter based on these facts.
Pre-approval
The bank takes the same information and requests documentation. They also run a credit check and verify all of the information you give them.
Why does it matter?
Sellers and Real Estate Agents understand the difference and they prefer a Pre-approval letter. It shows that you have been vetted so to speak about your financial ability to purchase the home.
For the last few years agents here in Hendersonville have been requiring a letter to be submitted with an offer. They don't want to tie up a seller with insufficient funds.
If you are considering a purchase, you may want to go ahead and get Pre-approved prior to starting your search.
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