Does it Help to be Pre-Qualified by a Lender?
Obtaining a pre-qualification letter from a lender is a relatively quick process that requires less information than getting pre-approved. However, it is important to note that a pre-qualification letter only provides an opinion from the lender regarding the maximum amount of real estate that the buyer can qualify for. In a seller's market where there is high competition, a buyer with only a pre-qualification letter may lose out to another buyer who has already been pre-approved. Therefore, it is recommended to obtain pre-approval instead of pre-qualification to have a stronger position in a competitive real estate market.
Get Pre-Approved by a Lender
Obtaining a pre-approval letter has several advantages. It enables you to determine the exact amount of real estate that you can afford, providing you with a competitive edge over other buyers in a seller's market. Additionally, it is more efficient and reduces the time taken by the lender to fund your loan. When you identify a property you wish to purchase, your pre-approval puts you in a stronger position to make an offer compared to someone who is less prepared.
Be prepared to provide comprehensive documentation, which the lender may independently verify, including but not limited to:
- Job and career status
- Monthly debt payments
- Cash available
- Total assets and debts