Pre-qualifications can be a bit of a ‘reality check.’ After receiving a preliminary answer from a lender, you may feel more confident in your ability to make a real estate purchase. Then, you can move on to the next step, which would be a pre-approval. Or, you may decide to wait until you can save for a bigger down payment, before spending your time shopping the market, which may be fruitless otherwise. A pre-approval is, more-or-less, a clear ‘yes’ from a lender. They are saying that, barring extenuating circumstances (such as job loss, or a poor house inspection), that you will get a loan from them to buy a house. To others, being pre-approved is an indicator that you are serious about buying a home. Real estate agents, sellers and lenders will give you more clout at open houses or during home viewings. With a pre-approval, you’ll be able to make actual offers on a home you want to buy. This is useful if you see one that you like, and don’t want to lose time waiting for a pre-approval, in case others are also bidding. Pre-approvals are not once-for-all It’s important to know that pre-approvals generally have an expiry date when it comes to the interest rates that you will be guaranteed for your loan. These can last up to a few months (it depends on the lender). Knowing this, you won’t want to apply for a pre-approval if you’re not ready to start bidding on homes. Home shopping can take a considerable time commitment on your part. Also, applying for too many pre-approvals can affect your credit score. This in turn, can impact your future pre-approvals and interest rates. So, this is something to consider weightily. Please see more on our website.