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Pre-Qualification and Pre-Approval Letters

Before you make an offer…

A pre-qualification is a quickly derived opinion from a lender of the maximum amount of real estate you can qualify for.  It often is written in a letter form. Less information is required for a pre-qualification.

A pre-approval is a more in-depth process. It tells how exactly how much real estate you can afford.  When placing an offer on a property it is assumed that at the very least you will have a pre-qualification letter, however, it is not nearly as beneficial as having a pre-approval letter. In a competitive seller’s market, an offer from a buyer with a pre-qualification letter could lose out to a person who has a pre-approval letter. Therefore it is also a good idea to have the letter in an electronic form to make for fast and efficient accompaniment with an offer.

Also, being pre-approved is more efficient; it reduces the amount of time it will take your lender to fund your loan. When applying for pre-approval, be prepared to provide comprehensive documentation, which the lender may independently verify, including but not limited to:

  • Job and career status
  • Income
  • Monthly debt payments
  • Cash available
  • Total assets and debts

NOTE: At the very least you will have to provide a pre-qualification letter to make an offer on a property.

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