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You’d never go shopping without a wallet, and shopping for a home without getting pre-approved first is about the same. During a pre-approval, the lender will verify your finances, so they can decide how much to lend you.
Pre-Qualification vs. Pre-Approval
You’ve probably heard of both a pre-qualification and a pre-approval, but one is a lot better than the other. If you’re serious about buying a home, skip straight to the pre-approval. It requires a credit check and financial documentation. Because the lender actually verifies your financial information, it’s a lot more robust than a pre-qualification.
Here are some of the advantages of getting a pre-approval before you shop for a home:
- When you get a pre-approval, the lender tells you how much money you’re likely to be approved for (keep in mind that a pre-approval is never a commitment to lend). This way, you won’t shop for homes that are over your budget.
- Because the lender has already gone through your financial documentation and pulled your credit, a pre-approval makes it more likely that they’ll be able to approve your loan once you do find the home you’re looking for.
- A pre-approval shows all parties that you’re not just window shopping. You’re serious about buying a home, and that strengthens your offer.
Now that you’ve been pre-approved, it’s time to start shopping for your dream home.