Many buyers apply for a loan and obtain approval before they find the home they want to buy. WHY?
Pre-Qualification:
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Determining a potential borrower's ability to qualify for financing. Builds credibility for a buyer and gives weight to their offer.
Generally interest rates are locked in for a set period of time. You will know in advance exactly what your payments will be on offers you choose to make.
You won't waste time considering homes you cannot afford.
Pre-Approval:
- Determining a potential borrower's ability to qualify for financing.
- Strengthens an offer much more so than a pre-qualification.
A seller may choose to make concessions if they know your financing is secure. This may make your offer more competitive if other buyers are making offers on the same property. You can select the best package without being under pressure.
How Credit Affects Buyers
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When a buyer looks for a house and needs help financing it, lenders will review their credit report. A credit report is a history of how one has managed their finances and repaid debt.
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When applying for a mortgage, the lender may request a credit score, a number known as a FICO score. A credit score is a generated number that indicates ones ability and willingness to repay dept based on credit record.
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A buyers FICO score is part of the mortgage information that will dictate whether or not a buyers application is approved. It may also be a factor in determining the interest rate they will qualify for.
The three Credit Bureaus
Experian, Equifax, Trans Union
