4 years ago

Save 2% When Buying in NYC: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/
NYC Buyer Closing Cost Calculator: https://www.hauseit.com/closing-cost-calculator-for-buyer-nyc/

What's the difference between Pre-approval and Pre-qualification letter in New York City real estate? We will demystify this topic in the following video. My name is Nick at Hauseit. We are the largest Reduced Commission Platform for buyers and sellers here in New York City, established in 2014. So, let's get started.

So many first-time homebuyers in New York City are quite confused about the difference between a pre-approval and a pre-qualification letter. There's a certain understanding in the marketplace that one of them is more intense than the other as it relates to the implications for a credit pull on your credit score. More specifically, the general understanding is that a pre-approval requires a hard credit pull whereas a pre-qualification is nothing more than a soft credit pull. So, naturally many buyers are somewhat hesitant to pull the trigger on a full-blown pre-approval given the implication that it may lower their credit score.

And the truth is, for some listings in the city you might be able to get away simply by submitting a pre-qualification letter with your offer as opposed to a full-blown pre-approval. If you're buying a condominium the chances of this being okay, submitting a pre-qualification letter are the highest. However, if you're buying a co-op apartment it's highly unlikely that the listing agent and the seller will agree to negotiate with you in good faith and accept your offer unless you present them with a proper full-blown pre-approval letter.

Therefore, we do suggest if you're a serious buyer and you're thinking of purchasing a property withing the next few months to actually move forward with the pre-approval process in New York City real estate hot properties can go quickly. So, if you fall in love with the place and you haven't gone through the endeavor of the pre-approval which can take a few days. You might actually lose out on a property simply because you're not prepared. Moreover, a pull in your credit is very healthy and in fact its generally a good thing to have a hard pull from time to time. Furthermore, when you pull your credit multiple times within a 45-day period, its generally considered to be just one pull for the purposes of your credit score.

And so, what this means essentially, is that you can actually get a pre-approval letter with multiple lenders and no, it should not count as multiple hard credit pulls. So, the implication there is that it won't harm your credit score as much as you may think.

The other consideration about a pre-approval vs. a pre-qualification letter in New York City is specifically the fact that you don't actually have to use the bank who gives you the pre-approval letter. The pre-approval letter itself serves really only one purpose, well, aside from the fact that it tells you what you can afford, it gives the seller and the listing agent the confidence the need to view you as being a credit worthy and financially qualified buyer. So, you can submit an offer with a pre-approval letter say from Chase bank but once you have an accepted offer and you sign a contract and it comes time to apply for a financing there is no requirement or obligation for you to proceed with Chase who gave you that original pre-approval letter.

Instead, this is the perfect time for you to shop around, reach out to multiples banks and going back to what we mentioned about hard credit pulls during a 45-day period all being put together and counted as one pull. Its therefore not super detrimental to your credit score for you to have conversations with a few banks so you can figure out the best rate and figure out which mortgage banker or broker you really get along with and who you think might help you move forward with the deal in the most efficient and enjoyable manner.

One final note about pre-approval letters, as we mentioned you can change banks after you have an accepted offer and before you apply for financing. Therefore, it’s probably a good idea to request a pre-approval letter from a nationally recognized lender. And the reason being is during the course of a negotiation you want the seller and the listing agent to have the utmost confidence in your financial qualifications. And certainly, presenting a pre-approval letter from someone like Wells Fargo or Bank of America will really get that message across.

Save 2% When Buying in NYC: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/
NYC Buyer Closing Cost Calculator: https://www.hauseit.com/closing-cost-calculator-for-buyer-nyc/
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Hauseit LLC, Licensed Real Estate Broker
Tel: (888) 494-8258 | https://www.hauseit.com
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