Getting ready to buy in St. Johns? What to know to finance a home. You may have heard of both pre-qualification and pre-approval – what are the differences and does it matter? When buying a home, the answer is yes! Let’s learn about the differences and understand why knowing the difference can set you up for success.
Loan Options: Pre-Qualification vs. Pre-Approval to Buy in St. Johns
Pre-qualifications are more of an estimate. You plug numbers into a calculator and receive an estimate of what you’ll likely be able to borrow. In this case, there are no credit checks making this more hypothetical than commitment. Pre-approvals more closely resemble a financial physical of sorts. Here, you can expect your lender to look at income, assets/liabilities, debts, recurring payments (car(s), student loan(s), etc) and run a credit check. In turn, they typically provide commitment letters indicating that a loan for the stated amount is would likely meet requirements. In both instances – neither are a guarantee of a loan. The pre-approval letter offers more strength given the review.
What Do Sellers Want in a Buyer?
In general, sellers are looking for the strongest possible offer. Cash will always be king and typically is the regarded as the strongest way to dominate an offer. That said, there are times when sellers will look beyond cash. In those cases, it is imperative to present the strongest possible offer. A strong offer to a seller indicates the highest chance the deal will come to a close without issue.
While pre-qualification letters may look appealing – remember, there have been no verifications – meaning that ultimately there could be underlying deficiencies. Whereas with a pre-approval letter, while no guarantees, there is a higher likelihood of the mortgage requirements being met for a successful loan closing. When a seller is faced with competing offers – from a pre-qualified buyer vs. a pre-approved buyer – it is likely that they would opt for the pre-approved offer (assuming all other facets of the offer remain equal).
Getting Ready to Buy in St. Johns: What to Know to Finance
Buyers wanting to be successful at home shopping are wise to present as the strongest transaction. I recommend house hunting with a pre-approval letter. With that in mind, if you have questions on pre-qualification or pre-approval or would like to arrange a consultation, please contact me. I would be happy to help you look to buy in St. Johns, FL.
You can also reach me on my other pages, like on Instagram. Alternatively, if you are in need of a lender contact – please advise as I have some great contacts to present for your consideration.