| Pre-Qualified
or Pre-approved? A buyer in
a competitive market has a better chance of their offer being
accepted by being prepared with a pre-approval. What's the
difference?
Neither pre-qualified nor
pre-approved:
This buyer has provided no evidence that they can afford the home
they are offering to purchase.
Pre-Qualified:
This buyer has provided verbal and perhaps some information on paper
regarding their income, debts, assets and credit. They may or
may not have had their credit report given to a loan officer for
evaluation. The most this buyer can offer a seller is a loan
officer's opinion of the buyer's ability to buy the home.
Pre-Approved:
This buyer is well prepared to buy a home having provided
evidence of credit scores, income, assets, liabilities, and cash
reserves. Much of the paperwork for this buyer's loan is
completed. The letter from the loan officer or even possibly
an underwriter offers the strongest evidence that the buyer is
capable of following through with the financing. This buyer
can close a loan quickly.
Look at the situation from a seller's
perspective. You can imagine the strength of a pre-approved
buyer in a multi-offer situation--which buyer would you want to deal
with?
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