The Importance of Pre-qualification & Pre-approval

Almost all home buyers, especially first-time buyers, want to buy the home of their dreams.  They are eager to rush out and see "the best" that is available.  While their excitement and enthusiasm is understandable, it is not always beneficial.  Viewing properties that are not within the buyer's correct price range is a waste of everyone's time, and always leads to disappointment.

Affordability is based on many factors, not just income.  Credit ratings must be looked at, how much debt a person has must be factored in, and not all mortgage programs have the same rate of interest.  That's why pre-qualification is important.  Once all factors have been examined, a lender will provide a buyer with a monthly payment amount that fits the buyer's means, and that saves time for everyone.

Pre-approval is also very important.  It is a preliminary commitment from the lender, that based on your application and the documentation you have provided, you stand a very good chance of getting final approval for your loan, pending appraisal.  If you were a seller and two buyers made an offer on your property, would you choose the buyer who has a letter of pre-approval from a lender attached to their offer, or would you risk selling to the buyer who has not been pre-approved and is perhaps not even qualified?  The pre-approved buyer, of course!