Do You Need a Loan Pre-Qualification or Pre-Approval to Buy a Home?
Before you begin to shop for a new Denver home, you should set up a time to meet with a lender to figure out how much you can afford. This will put you in a better position as a Denver home buyer. That's when it's important to understand the distinction between being pre-qualified for a loan and pre-approved for a loan. The difference between the two terms will be crucial when you decide to make an offer on a house.
To get pre-qualified for a loan, your lender will collect information about your debt, income, and assets. They'll look at your credit profile and assess goals for a down payment and get an idea of different loan programs that would work for you. Next, he or she will issue you a pre-qualification letter indicating the amount you are pre-qualified to borrow.
It's important to understand that a pre-qualification letter is just an estimate of what you are eligible to borrow, not a commitment to lend. Getting pre-approved for a loan gives you the competitive advantage when the time comes to bid on a Denver metro home because you have been approved for a loan for a specified amount.