| FAQs |
There are two types of "pre” letters:
1. Pre-qualification is an informal agreement between you and your lender. The lender gives their opinion on how much they think they will be able to lend to you based on information that you have provided to them. Your lender doesn’t do any background checks at this point. It relies solely on you portraying an accurate picture of your circumstances. Because this is more like a friendly handshake, the lender can decide not to give you the loan if they find out later that you have been less than candid with them. There is no charge to do this and you are under no obligation to get a mortgage with this lender if you find a better deal later.
2. Pre-approval is more serious. The bank will actually check your credit history, employment information, assets, and liabilities. The only thing they won’t check is the property that you plan to buy, because, of course, you haven’t found it yet! If you’re concerned that you might not qualify for a mortgage, we highly recommend that you go for pre-approval. It will put your mind at ease while you search for your new home and make the entire experience much less worrisome. Some lenders charge for a pre-approval. If you decide to go with one who charges for this service, make sure you’re really going to buy a house soon or you’ll just be throwing money away.
