You may have been pre-qualified for a loan, leaving you pretty
excited and anxious to get shopping. If so, sellers and selling agents
might have been a lot less enthused than you might have expected. This
indicates that you should gain more understanding into the difference
between pre-qualification and pre-approval of a loan.
With pre-qualification, you’re simply experiencing a casual financial evaluation. You’re likely holding a document that states how much you’re worth based on some preliminary stats. This is always a good idea, but it doesn’t make you a cash buyer.
A pre-approval letter, however, does indicate that you are ready to buy. You’ve paid a fee up front to get approved, and you’re holding onto a document that is good for a specific amount of time – 30-90 days, typically. This is more appealing to a seller, but if you don’t use it, you lose it.
Always research all of your options before you apply for a loan. You don’t want to be stuck with something unsatisfying when there might have been a better opportunity right around the corner.
With pre-qualification, you’re simply experiencing a casual financial evaluation. You’re likely holding a document that states how much you’re worth based on some preliminary stats. This is always a good idea, but it doesn’t make you a cash buyer.
A pre-approval letter, however, does indicate that you are ready to buy. You’ve paid a fee up front to get approved, and you’re holding onto a document that is good for a specific amount of time – 30-90 days, typically. This is more appealing to a seller, but if you don’t use it, you lose it.
Always research all of your options before you apply for a loan. You don’t want to be stuck with something unsatisfying when there might have been a better opportunity right around the corner.
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