If you're buying a home this spring, today's housing market can be challenging. With so few homes on the market right now, plus higher mortgage rates, you must have a firm grasp on your home-buying budget. You'll also need a sense of determination to find the right house and act quickly when you go to put in an offer. One thing you can do to help you prepare is to get pre-approved.
Pre-Approval Vs. Approval
Getting pre-approved is an essential first step when you're buying a home. It lets you know what you can borrow for your loan. While pre-approval is an initial evaluation of your financial situation and creditworthiness, it will help you focus on a price range you can afford. However, to get a step up on the competition, you should consider obtaining a final approval, which is a more thorough review of your financial information and credit history to determine whether you meet the lender's requirements for the loan.
Pre-approval is typically a conditional approval, which means that it is subject to the borrower providing additional documentation and meeting other requirements set by the lender. Final approval is the lender's confirmation that the borrower meets all the requirements and is approved for the loan.
The main difference between pre-approval and final approval is that pre-approval estimates the maximum amount a borrower can borrow. In contrast, final approval is the actual approval of the loan amount and terms. It's important to note that even if a borrower is pre-approved for a loan, there is no guarantee that they will be approved for the loan when they apply. The lender will still need to verify all the information provided by the borrower before making a final decision.
In any market, Sellers always give more credibility to a buyer who has been approved for the loan.
Bottom Line.
Do your homework even if you are in the preliminary stages of your house-hunting journey. You never know when you will find the perfect home. Be ready. Carefully choose to work with an experienced agent knowledgeable about financing and the tax benefits of owning a home. Cheryl Fox is an experienced Realtor and CPA specializing in residential real estate. For a free phone consultation, call Cheryl today at 818-207-2013