Why Get a Pre-Approval Letter Versus a Pre-Qualification Letter

When working with Gilbert home buyers I frequently get asked to explain the difference between a pre-approval letter and a pre-qualification letter. I would recommend getting a pre-approval letter from your lender and here is some of the reasoning behind the advice:

 Getting a pre-qualification letter is much easier to get from your lender. You just need to give your lender some basic financial information and usually in a short period of time the lender can email or fax you your pre-qualification letter. A pre-approval letter would require you to supply your lender with more detailed information. The lender will also need to verify this information.  You will need to supply your lender with documentation to verify information such as your employment, how you will come up with your down payment and other aspects of your current financial situation. The pre-approval process does require more effort but the benefit is having an offer that will give Gilbert homes sellers more confidence in your ability to obtain financing  than an offer submitted by a buyer with just a pre-qualification letter. This could be the edge that gets your offer accepted in a multiple offer situation.

 You will also have much more solid understanding of how much money you can qualify to borrow because your lender has been able to view your financial situation in greater detail. Your Realtor can then target the Gilbert homes that match your needs and fit within your price range.  

 A few things you should be aware of: Pre-approval letters are not binding on the lender and are time-sensitive. If your financial situation were to change such as a job loss, you make a large purchase like a new car, run up credit card bills or interest rates rise, your lender will need to review your situation and recalculate your maximum mortgage amount accordingly.

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