When you decide to buy a home in Atlanta, one of the first things you should consider is what you can spend. This will help you determine what communities to search, how much house you can buy and what your overall budget will be. However, when it comes to mortgages, many of the steps can be confusing, especially for first-time homebuyers. For example, what is the difference between getting pre-approved and pre-qualified?
What is a Pre-Qualification?
A pre-qualification is fairly basic. It simply gives you an idea of how much house you can afford. As a matter of fact, it is often one of the first steps a buyer takes. You provide your lender with some basic info, like income, debts and how much down payment you can make. The lender then provides you with a written estimate that you can use as a guide when you begin your search.
What is a Pre-Approval?
A pre-approval requires more effort on your part, as well as on the part of the lender. You provide the lender with paperwork that proves your income and assets, and he or she will verify all of your information, ranging from your credit score to employment information. Instead of a mere estimate, if pre-approved, the lender gives you a written commitment telling you how much the bank is willing to lend you. You must still go through the final steps to be approved for the mortgage, but most of the time, the numbers will closely match.
Why Do Agents Recommend You Get Pre-Approved Before Beginning Your Home Search?
While obtaining a pre-approval is a bigger step than obtaining a pre-qualification, many real estate agents suggest you go ahead and do it before officially beginning your search for a new home. There are several reasons for this. First, it typically prevents you from running into any surprises when you do actually apply for a mortgage. You never want to fall in love with a home only to find out the bank will lend you $300,000 less than what it is worth. It also prevents you from wasting your time looking at homes that you cannot afford or from not looking at the homes you want because you fear they cost too much for your budget.
Another important reason to obtain a pre-approval is that sellers and their agents will take you more seriously when you make an offer. This is especially important when you are not the only one interested in a home. If three different people put in an offer, but you are the only one with a pre-approval, the seller may decide to accept yours, even if it is a little lower than the others.
To learn more about how you can become preapproved and start searching for the home of your dreams, contact Atlanta Fine Homes Sotheby’s International Realty at 404.237.5000.