Why Get Pre-Qualified or Pre-Approved?
Pre-qualification acts as a dry run of the loan application process. The mortgage lender will use details you provide about your credit, income, assets and debts to arrive at an estimate of how much mortgage you can afford. The whole process may take only minutes or a few hours at most, and is free. While a pre-qualification is non-binding to the lender (because the information you provide has not been verified), it does serve as a good indication to potential sellers of your general credit worthiness. These days most sellers will not accept an offer without a pre-qualification or pre-approval letter. So if you are serious about buying a home, this is the first step towards getting you closer to your goal.
Getting pre-approved is the next step, and it tends to be much more involved. A pre-qualification should be a good indication of credit and the ability to borrow, but a pre-approval is the definitive word. To get pre-approved, you will need to complete an official mortgage application and supply the lender with the necessary documentation to perform an extensive check on your financial background and current credit rating.
Although mortgage interest rates are rising, we are at historic lows, making it an excellent time to buy real estate. Talk to your local bank or mortgage lending institution for more details regarding finding the right mortgage product for you and your family.