LIHU‘E — The terms pre-qualification and pre-approval can often bring confusion to many people who are looking to purchase a home. It is important to understand the difference between pre-qualification and pre-approval. When you begin shopping for a home, you
LIHU‘E — The terms pre-qualification and pre-approval can often bring confusion to many people who are looking to purchase a home. It is important to understand the difference between pre-qualification and pre-approval. When you begin shopping for a home, you will want to know how much you can afford. More importantly, your real estate agent and the home seller will want to know that your loan is in place.
Why should you get pre-qualified? Pre-Qualifying is a quick way to determine what price range of homes the real estate agent and buyer should be reviewing. It saves you time and avoids the frustration of finding something you cannot afford!
Why should you get pre-qualified when you’re refinancing? When you’re refinancing, pre-qualifying will allow you some peace of mind that your refinance amount is achievable, especially if you’re trying to get cash back from your property equity.
Why should you get pre-approved? Pre-Approval is a must in today’s environment; most sellers require it up front. It improves the buyers negotiating position and the length of time it would take to close the deal. There is almost a certainty that the buyer will be able to settle on the house.
Advantages of being pre-approved:
1. Now that your loan is in place, you can start looking for the right home.
2. You will also be taken much more seriously when it comes time to choose an agent. In a tight market, a pre-approval letter from a lender can make all the difference in whether your offer is accepted by a seller over an equal offer by another person.
3. Once you find a home, you can move much more quickly. A typical closing will take place a month or even six weeks after an offer is accepted. If you are pre-approved, you can cut this time down, depending on the time of the year and how busy the lender, appraisers and other service providers are.
• The Kaua‘i Board of Realtors is a nonprofit organization comprised of 503 Realtors and associates from the bank, mortgage and title and escrow industry. It is a real estate resource for its members and the community it serves. The board answers reader questions twice a month in the Business section. For more information or to submit questions about the real estate industry, mail them to: Kaua‘i Board of Realtors, Attention: Questions, 4359 Kukui Grove Street Suite #103 Lihu‘e, HI, 96766, call 245-4049 or visit www.kauaiboard.com
