Are you in the market for a home purchase in Albuquerque? One of the first steps (if not the very first) a buyer will take in the home buying process is getting pre-qualified and/or pre-approved. For many first-time home buyers, the difference between these processes is unknown, however, it is critical to understand the difference. In most instances, the current housing market climate is considered to in favor of the seller, making it crucial that buyers get pre-approved for their loan before making an offer on a home. That being said, there are also benefits to getting pre-qualified as well. Let’s take a deeper look at the differences:
You’ll need physical documentation of the following:
- Current Employment Status
- Person Assets
- Current Outstanding Debts
- Credit History
- Estimated Amount for a Down Payment
Think of it this way: if you have been pre-approved for a loan amount, you are legally able to offer that amount (or anything less than) on the purchase of a home. Once you have given all of your physical documentation to a lender, they will crunch the numbers and give you a physical notice stating both the amount you’ve approved for as well as a potential interest rate. Keep in mind that interest rates are fluid and change every day, so this amount is just an estimate. Getting preapproved is free and you can do it both online or in person.
- It can’t be emphasized enough that it Is crucial to get a pre-approval BEFORE you begin putting offers in on homes. You can bet that a seller will not even consider your offer unless you have given proof that you are approved for that specific amount. If you haven’t been pre-approved, even those who offer less and have been pre-approved will almost always have their offer accepted over yours.
- Negotiation Power. When you know the maximum amount, you’re able to spend on a home, you’ll have the ability to negotiate more confidently with a seller on the offer itself as well as contingencies.
- A faster close. Closing on your home will be both a more swift and much faster process if the approval is already taken care of, giving less room for last-minute issues to arise.
- The actual searching part of the journey will be much easier if you can filter out any homes that aren’t within your approval.
- There is a one time hit on your credit score when you get pre-approved. However, this is only about 5 points and is very much worth it in the long run if you’re serious about purchasing a home.
- The approval only lasts for 90 days before you would need to get approved again. So, you want to make sure you are absolutely willing to make an offer and purchase a home before you get pre-approved.
If you are serious about buying a house, getting pre-approved is always the best option. No pre-approval and you can essentially guarantee you won’t find yourself with an accepted offer.
You’ll need to know the following:
- Current Income
- All Current Debts
- All Personal Assets
Getting pre-qualified is a wonderful first step to take when thinking about buying a home. It’s free, easy and can be done in the comfort of your own home. Simply search almost any bank or credit union and they will have a pre-qualification application for you to take on their website. If you aren’t sure where to begin regarding searching for potential homes, this is where you can start to find your estimated price range, making it an ideal starting point for first-time homebuyers.
- The process is free.
- There is no time limitation on your qualification.
- It won’t affect your credit score.
- It can help you get an idea of the kind of house you’ll be able to afford.
- It is entirely an estimate. Due to this fact alone, neither a seller nor their realtor will take an offer seriously if the potential buyer only has a pre-qualification.
If you are interested in finding out about how much you could afford on a home but aren’t sure you’re ready to make an actual commitment, qualification could be the best option for you. However, the minute you are serious about searching and making offers, you NEED to get pre-approved!
Whether you’re looking to get pre-qualified or pre-approved, congratulations! You’re taking the first step in the home buying process…and the Sandi Pressley Team is here to assist you every step along the way!