With the winter weather blustering outside, many people may choose to stay inside this weekend. If you desire to purchase a Westfield home in the near future, you might want to choose to start looking at available homes for sale. Another task on your home buying “to do” list should be to get your funding in line before you physically start to look at properties. This entails either getting pre-approved or pre-qualified. But these are two very different things. Which option should you choose?
Pre-Qualified vs Pre-Approved
Pre-Qualification
The pre-qualification process takes much less time than the pre-approval process. First, you sit down with your lender. (Avoid one of the common mistakes buyers make by interviewing several lenders before deciding on the one you want to use.) Then, you provide the lender with a list of your assets, income, and debt. After that, they look everything over and provide you with an estimate of the maximum amount you qualify for based on those parameters. This takes a couple of days. However, it does not guarantee you a loan. So, while a pre-qualification is helpful when submitting an offer, it is not as sound as a pre-approval letter.
Pre-Approval
Unlike the pre-qualification process, pre-approval takes a bit longer. The lender goes more in-depth with their research into your financial background. You still provide a list of your debts, assets, and income. However, they also pull your credit report and require you to provide proof of income tax returns, bank statements, paycheck stubs, etc.). Furthermore, you must tell your lender how much you plan on putting down for the loan. At the end of this process, your lender supplies you with a conditional commitment for a loan amount. Then, you may look at Westfield homes for sale either at that amount or below it. This helps keep you focused only on homes you know your loan will cover. When you do find a home you like, let your lender know how much you are paying for the home and they can provide you with a pre-approval letter to submit with your offer.
Even though getting pre-approved takes longer, it lends more credence to an offer than a pre-qualification letter. Also, it cuts down your escrow time when you get this done early on in the process. You stand a much better chance of a seller accepting your offer if you get pre-approved first. So, get started on this step of the home-buying process as soon as possible to make the path to home ownership a little easier.