Imagine this, you’ve been on a stakeout for the last three weeks waiting for a home in a beautiful tree-lined neighborhood to be put up for sale. The nearby high school is great and your commute to work couldn’t be shorter. In other words, the place is just perfect for you.

You Want That Home

Your dream home goes on the market and you don’t think twice. You negotiate, set a price, and make arrangements to close the deal. Everything is in place but you haven’t heard if your home mortgage is approved yet. You are left at a hang and no confirmation is still seen.

You’re too late

Someone got to it before you did. While this bitterly dashed dream is often a reality to many and sometimes is difficult to get over with, you can be smart and take care of the mortgage beforehand.

Pre-Qualification vs. Pre-Approval for New Home Loans

It is actually possible to be approved for a new home loan even before you pick out the house. There are two ways to do it:

Pre-Qualification

This is a simple handshake agreement between you and your lender. They’ll scan your credit report, ask about your income, and tell you how much you can expect to qualify for. There’s nothing in writing and there are no guarantees. This is more like a free guide than anything else. Everything goes in agreement between the parties and formalising comes in later.

Pre-Approval

An approval is a much more formal deal. All of your personal finances are heavily scrutinized and a banker will enter into a written agreement to finance your home mortgage up to a certain amount. There is generally a fee for this type of contract. On this type of arrangement, it is definitely sure that you get the place and it can become contestable whenever non-performance between either parties ensue.

When shopping for a new home, try getting a leg up on the competition by seeking a pre-approval so you can bid and close deals with more confidence. Home loan Pre-qualifications and pre-approvals are a great way to getting a head start on fulfilling your dreams of home ownership. Not only you get to know the significant people in the agreement but also you get to develop a rapport between them that comes in important in times of discomfort and services upgrade.