Before going on a cross-country trip, what’s the first thing you would do? Top off the gas tank! Purchasing a home is no different. The first thing you should do is to check your credit rating. The better your credit rating, the more easily you will qualify for a loan, and the better the interest rate you will get. In effect, start your house-hunting trip with a full tank of credit!
The difference between being pre-qualified and pre-approved is simple:
If you are pre-qualified it means that you POTENTIALLY could get a loan for the amount stated to you, assuming that all of the information given was accurate and true.
If you are pre-approved, it means that you have undergone the extensive financial background check – which includes looking at your credit history, previous tax returns and verifying your employment – and the lender is willing to give you a loan. You’re APPROVED!
When it comes time to make an offer, being pre-approved gives you a stronger bargaining position. A seller will prefer your offer, because they know that the loan will not fall through. Your offer will also be more credible. Being pre-approved also means that your loan application will be accelerated. You will be in your perfect home quicker and with less stress.