What is a pre-qualification/pre-approval letter?
A pre-qualification letter is a rough estimate of what loan amount you will be able to receive. It is based primarily on your gross income, and does not take into account your debts and expenses. For this reason, I recommend that you obtain a pre-approval letter for a more accurate assessment of what you can afford. A pre-approval letter is a document that you receive from a lender that takes into account both your income and your expenses. Having a pre-approval letter from a specific lender does NOT obligate you to obtain your home loan from that lender. Another benefit of a pre-approval letter is that it makes your offer stronger. You may have a slightly lower offer than someone else, but if the seller sees that you can obtain a loan for that amount, they may accept your lower offer because of the lower probability that the deal will fall through.
