That “pre-qualification” letter is absolutely worthless. It means nothing and should never be counted on as any sort of security for Charlotte NC home buyers.
The pre-approval and pre-qualification are many times used interchangeably but they are in fact very different.
Pre-approval means that a mortgage professional has consulted with you, taken your information (including employment, assets, income, debts, down payment – yes, you do need a down payment to buy a house!!!) and verified that information. In other words, they’ve done the homework and looked at how you would qualify for current loan programs, and also narrowed the price range that you could realistically expect to successfully obtain in a mortgage.
Pre-qualification simply means they’ve talked with you, taken your word for your income, assets, job, current debt obligations and stopped there. So IF everything you said is true and can be verified at some later time, you should qualify for x amount in a mortgage.
The problem is that a pre-qualification is simply based on “if” and “should” and is completely founded on the assumption that the info you’ve provided is not only accurate but also verifiable.
Would you go grocery shopping and head to checkout based on what you “should” or “might” have in your bank account or wallet? Imagine getting your total and finding you don’t have nearly enough to cover your purchases – you’ve just set yourself up for failure by not having a solid idea of what your budget can buy.
Going house hunting without a pre-approval is the same thing and it’s setting a buyer up for potential failure and disappointment.
There are a ton of potential pitfalls on the road from offer to contract to closing and many of those are financing related. Having a solid pre-approval before seriously searching for a Charlotte NC home is not optional, it’s the first step of the home buying process.
This applies whether you’re buying a first home or your 20th home – if you’re planning on financing the purchase, pre-approval with a reputable mortgage professional is still required before going out and viewing homes.
Copyright©2008 by Diane McDermott, All Rights Reserved, “Pre-Approval: Don’t Go Shopping Without It!”