It Is Take a Tip Tuesday and being prequalified and preapproved are not the same thing when getting a home loan. There is a big difference between being pre-qualified and pre-approved. If you are wanting to write offers on homes even the most inexperienced realtors know the difference between a pre-qualification letter and a pre-approved letter. So which one do you need to start a home search? When do you need a pre-qualification letter and when do you need a pre-approval letter when buying a home? and whats better pre-approved or pre-qualified?
In this video, I will cover those burning questions so you will know what letter you need when starting your next home search.
***If you are buying your first home you may be interested in checking out my video https://bit.ly/2OoaLut
So whats the BIG Difference in a pre-qualification letter and pre-approval letter. I recently got into an argument with a real estate agent about this, I knew it was time to explain this in a video. I figured if she was confused by the difference than many buyers and sellers may be as well. If you are starting your home search and you are unsure how much of a home you can afford you will want to reach out to a trusted lender, (if you do not have one I can get you a complete list of lenders I have used over the past 10 years) and find out how much home you pre-qualify for this is a very general amount and not set in stone. This letter is just a guideline to help you budget for your home when you first start thinking about buying.
For home sellers I would not accept an offer with a pre-qualification letter because they buyer has not given the lender enough information to get a pre-approval letter. The lender has only received a possible buyers’ basic information and hasn’t gotten the full picture of the buyer finances. They are only going by what the borrower says about their monthly paycheck, credit report and outstanding balances and knows a little about the buyers’ job history.
So why is a pre-approval letter is better? If you are a buyer the lender verifies the borrower’s information and documentation to determine exactly how much it would be willing to lend to that borrower. If you are a seller this letter lets you know that the buyer has taken the proper steps to purchase your home at the price offered and they will be able to close if nothing changes in the time your home is under contract.
In closing, if you are shopping for a home and just need to know around about price to start looking at homes online a pre-qualification will work just fine. But if you have selected a realtor and are seriously shopping homes to write on offer on you will definitely need a pre-approval letter to make your offer stronger than the person who has a pre-qualification letter especially if you are in a strong market that has bidding wars if you like to see the video about bidding wars click here https://youtu.be/DtiAbq5nlIM
I hope you found this video about the difference of pre-qualified and pre-approved when buying or selling a home if you’d like to read more real estate buying and selling tips you can visit my blog at yourrealestatewhisperer.com
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If you have any questions about buying and selling your home feel free to reach out to me at any time by email or any respectable time by phone. All my contact information is listed below.
My name is Kristina Smallhorn, Your Real Estate Whisperer for Ascension Parish and I tell you all this “Because YOU Matter”
EXP REALTY, LLC
2900 Westfork Dr.
Baton Rouge, LA 70827
225-412-9982 ext 149
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Kristina Is a Licensed Realtor® with The Greater Baton Rouge Board of Realtors@ in the State of Louisiana. License #0912122918