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. . . and why a pre-qualification is not enough!

You can obtain a pre-qualification which gives you an idea of how much of a loan you will likely qualify for. The mortgage lender will use the details you provide about your credit, income, assets, and debts to arrive at an estimate of how much mortgage you can afford. 

Pre-approval is the best option however as it is a conditional commitment to actually grant you the mortgage loan. The mortgage lender actually pulls your credit to obtain information about your income, assets, and debts. The mortgage lender determines that you meet their requirements for credit and sends you a pre-approval letter that gives you leverage and informs your decisions as you begin your home search.

With a pre-approval, the Lender will let you know how much house you can afford to purchase, how much money you need for a down payment, and the advantages/disadvantages to putting down more or less money to obtain the best interest rate. The Lender will also inform you how much you need in cash reserves for Lender fees and other closing costs, like the appraisal.

These days, sellers will NOT accept an offer without a pre-approval letter, especially in a seller's market. Trust me, if you are serious about buying a house, obtaining a pre-approval letter is the first step towards getting you in your new home.


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