In the past, buyers used to go house shopping first and then get pre-approved for a mortgage. However, in today's competitive market, this approach may not be effective in securing your dream home.
Most lenders can pre-qualify you for a mortgage over the phone based on general questions about your financials. However, being pre-qualified is not the same as being pre-approved. Pre-approval requires you to fill out a mortgage application, undergo a credit check, and verify your employment, assets, and other financial information. With pre-approval, you know exactly the maximum loan amount you qualify for.
A pre-qualified letter is not verified and may not hold much weight when competing with other buyers who are pre-approved. Being pre-approved gives you credibility as a serious buyer and assures the seller that you can afford the property.
It's crucial to be pre-approved with a legitimate lender, such as banks, mortgage bankers, credit unions, savings and loan associations, mortgage brokers, or online lenders. Be wary of lenders who lose or misplace documents, gather information in an unorganized manner, lack knowledge about interest rates and costs, or cannot provide accurate information. Choosing the right lender is essential in the home buying process.
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