Presented by William Burton of NEXA Mortgage
They're more than just words!
Here are some real-estate terms that if not properly understood could be very costly .
Pre-Approved -vs- Pre-Qualified
When embarking on the journey of purchasing a home, potential buyers often begin with a crucial step: obtaining a pre-qualification. While pre-qualification is a useful first measure, it is essential to understand the more significant advantages of becoming pre-approved, particularly in North Carolina's competitive real estate market. Let’s explore the differences between pre-qualification and pre-approval, and why the latter is more beneficial for homebuyers in this region
What is Pre-Qualification? Pre-qualification is typically the first step in the mortgage process. During this initial phase, borrowers provide lenders with basic financial information, such as income, debt, and credit history. Based on this information, the lender gives a rough estimate of how much the buyer may be able to borrow. The process of pre-qualification is generally quick, often taking just a phone call or an online submission, with minimal documentation required. However, it is important to note that pre-qualification is largely based on self-reported information and a basic assessment of the buyer’s financial situation. As such, it does not guarantee that the buyer will secure a loan or the amount mentioned.
Tip: ( Because of potential lost of due diligence money our affiliate mortgage lender will go over in detail what your buying options are so having 2 months of Paystubs 2 months of bank statements and your tax returns for the previous 2 years will push you into the pre-approved status. )
Why Choose Pre-Approval in North Carolina? In North Carolina's real estate market, which can often be competitive, having a pre-approval letter can substantially enhance a buyer’s chances of success. Here are some reasons why pre-approval is particularly advantageous: 1. Strengthens Your Offer: Sellers are more likely to consider offers from buyers with a pre-approval. It shows that the buyer is financially capable and serious about the transaction. 2. Saves Time: Knowing the realistic budget allows buyers to focus on homes that fit within their financial range, ultimately speeding up the home search process. 3. Eases Negotiations: Pre-approved buyers have a stronger bargaining position when making offers. This can lead to better negotiations and potentially save money in the long run. 4. Expedited Closing Process: Since much of the documentation has already been reviewed, pre-approved buyers may experience a quicker closing process once they find a home, which is appealing to both buyers and sellers. 5. Secures your initial deposits: Knowing that you're approved takes the stress out of the transaction, it also adds security for your earnest money, and Due diligence.
Conclusion: While pre-qualification may be a helpful entry point in the home-buying process, securing a pre-approval is a critical next step for serious buyers in North Carolina. It provides a clear understanding of financial capabilities, instills confidence in the seller, and streamlines the purchasing process. By investing the time to pursue pre-approval, buyers can significantly enhance their opportunities in a competitive housing market, making them well-prepared to find their dream home.