Pre-Approval, Why You Need It

Pre-approved means you have a written commitment from a lender to lend based on your credit rating, income and current debt.  Lenders will determine the monthly payment you will qualify for based on estimated real estate taxes, homeowners insurance and association dues (if applicable) and depending on the loan term and interest rate, the lender will determine an amount you are qualified to borrow and issue a commitment to lend.  Getting pre-approved will let you know how much you can borrow and how much you can spend on a home.  Sellers prefer buyers who are pre-approved as they know they have a serious buyer who can come up with the funds to buy the house.  Often times sellers will not even entertain a bid that does not have an accompanying pre-approval letter.    Having a pre-approval will also speed up the lending process as the lender has already obtained the necessary documention of your income, credit and debt.  Most pre-approvals are valid for 90 days.