What is a pre-approval letter and why should buyers bother with it before they even look for homes?
You may have heard this term going around about a “pre-approval letter” but don’t know much about it. Is there really a difference between the term “pre-qualified” and “pre-approved”? There is quite a difference when it comes to the lender. Anyone can look at a mortgage calculator and determine how much a mortgage payment will be depending on the down payment and price of the home. It’s easy to figure out if that’s a figure you can budget in. But according to the lender it may be a different story. This is where pre-approval comes in. Being pre-qualified simply means you have looked over the numbers and have determined you can afford a certain mortgage payment. A bank may have even done this for you but to be pre-approved means the bank will actually loan you that amount of money to buy a home. Pre-approval requires a more in-depth look into your finances to determine exactly how and why you can afford a certain home. Lenders will sit down with you and go over all your income, debt, li
