Pre-Approval and Pre-Qualification in Charlotte

Carolinas Real Estate Podcast with Thomas Elrod

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Often, clients ask the difference between loan pre-qualification and pre-approval. Pre-qualification involves running your credit score. However, pre-approval goes beyond the credit score and obtains specific documents to determine if a loan is fit for you. These documents include pay stubs, tax returns, bank statements, and similar paperwork.

What’s the worst that could happen? Let's say a buyer starts looking at properties, writes checks, pursues an inspection, and obtains an appraisal. This costs, at least, a thousand dollars already. Then, when the lender or banker reviews all the financial information, the buyer learns they don’t qualify for a loan. Maybe a buyer’s debt-to-income ratio isn’t right. Maybe they didn’t factor in certain expenses to the overall cost.

That’s why pre-approval is so much more important than pre-qualification. It’s more legitimate to be pre-approved when home shopping because it proves to the seller that the buyer is committed. If you’re considering buying or selling a home, please get pre-approved. If you or anyone you know is thinking about buying or selling a home this year, give us a call or send us an email! We look forward to hearing from you.

Check out our last blog post to learn about the Charlotte real estate market for 2016