Congratulations. You’ve decided to buy a Tyler home. What should you do first? My suggestion would be to get started on your mortgage loan funding right away. Many Sellers as well as agents want to see a pre-approval or pre-qualification letter before they consider an offer. My Tyler Buyer Tip this week is which one is more effective: pre-qualification or pre-approval?
Tyler Buyer Tip: Pre-Qualify or Pre-Approval?
Loan Pre-Qualification
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Pre-qualification takes the least amount of effort between the two. It’s also the quickest and least effective. First, lenders simply look at your income and overall debt. Then, they tell you the most you would qualify for a mortgage loan based on that information. They don’t pull a credit report or investigate your income or debt any further. Just because you should be able to qualify for a loan that amount doesn’t mean you will be approved. If you want to get the ball rolling to look at Tyler homes for sale, a pre-qualification letter at least shows that you have begun talking to a loan company about funding. Unfortunately, if you’re in a highly competitive market, your pre-qualification letter won’t stand up to a pre-approval from another potential Buyer.
Loan Pre-Approval
Yes, pre-approval takes more time. However, it holds more weight with Sellers. When you go through the pre-approval process, you fill out an official application which may include a fee. Then, your lender pulls your credit score and vets the income and debt information you provide. After all information is compiled, they give you an approval amount as well as your interest rate. This doesn’t guarantee final approval. There are still a few more steps to complete after that (including an appraisal of the property in question). Since this takes the most time, it is important to start on getting your funding in place before you even start looking at Tyler homes for sale.
Whether you decide to go through all the steps of pre-approval or settle on a quick pre-qualification, make sure you get everything in writing from your lender on official letterhead. Unscrupulous Buyers in the past tried to “pull one over” on Sellers with a fake letter. Knowledgeable agents can spot a fake a mile away. Keep everything on the up-and-up. Talk to your Tyler REALTOR@ to see which letter proves better for your situation: pre-qualification or pre-approval.
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Pamela Walters, The Pamela Walters Group, Tyler’s Real Estate Experts