Real estate experts recommend pre-approved mortgages for buyers to gain an advantage in competitive markets. Pre-approval is more reliable than pre-qualification, as it involves verified information on the buyer’s employment, credit history, and cash. Buyers benefit from a specific amount of approved financing, saving time and avoiding homes outside of their price range. Shopping around for pre-approved mortgages is recommended, and lenders typically do not charge a fee for applications.
Many real estate experts recommend a pre-approved mortgage for real estate buyers. Especially during periods of stiff competition to buy homes, a pre-approved mortgage can help put buyers ahead of those without pre-approved financing, as sellers generally want to be sure of a buyer’s payment details. It is important to note that being pre-approved is not the same as being pre-qualified.
Prequalification for a mortgage means that a loan officer has made an estimate based on information received from the homebuyer. Pre-approval is more reliable since the information has been analyzed and verified. Also, the buyer’s employment history, credit history, and available cash are reviewed by the loan officer.
A pre-approved mortgage is not only advantageous from the seller’s point of view, but also from the buyer’s perspective. For one thing, the buyer has a specific amount of money they’re approved for, which helps focus the home search. The temptation to view homes outside of the price limit is often reduced when buyers know in advance how much money they will have financed. The buyer saves time and can avoid considering a home outside of their price range.
A pre-approved mortgage application must be requested prior to beginning the home search. Pre-approved mortgages must have a guaranteed interest rate so the buyer does not have to deal with interest rate increases. Since different real estate lenders have different terms on the pre-approved mortgages they offer, real estate buyers can shop around and choose the lender that best meets their needs.
Most lenders do not charge a fee for a pre-approved mortgage application. Lenders will look at income versus debt and also consider how much a buyer has for a down payment on a home. A buyer’s credit score is important to real estate lenders. Employment details, such as the number of years the buyer has worked at their current job, are also important to lenders when evaluating applications for a pre-approved mortgage.
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