Preapproved vs. Prequalified: Which One Is Better for You?
There’s a good reason why Audrey Fox, a broker for Howard Hanna Real Estate Services in Elizabeth City, NC, insists homebuyers be preapproved by a lender before they start to visit homes on the market.
“I’ve literally taken an offer from the property back to my office and by the time our buyer had contacted a lender and gotten a preapproval, the property was off the table,” she says. “Now, I insist that they have preapproval up front.”
Fox likens having a preapproval to doing your homework before the big test: It’s not necessarily fun, but it’s a really good idea to do it.
Still many buyers don’t bother. “Buyers often are eager to start looking at homes and tend to leave what they view as the boring, bureaucratic part of the homebuying process for last,” Michael Highfield, associate professor of finance and head of Mississippi State University’s department of Finance and Economics, tells Bankrate.com.
“But in this competitive market, any serious buyer should pursue a preapproval from a lender in advance to beginning a home search,” he adds.