Practice what you learned

Imagine that your friend has been pre-qualified and has begun shopping for a home. He’s discussing his plans and experiences and wants your advice. Decide what you think of his comments and select your response from the options provided – “Good Idea” or “Bad Idea.”

“I am pre-qualified for a $160,000 loan and I have  $40,000 for a down payment so I’m looking at $200,000 homes.”

Correct! Getting pre-qualified gives you a general idea of what you can afford but you should really get pre-approved if you are serious about buying a home. Pre-qualification is not a very significant step toward buying a home.
Incorrect. Getting pre-qualified gives you a general idea of what you can afford but you should really get pre-approved if you are serious about buying a home. Pre-qualification is not a very significant step toward buying a home.

“I’d rather just wait until I’m ready to buy and then get approved for my loan. Why waste my time getting pre-approved if it’s not a guarantee. Anyway, the pre-approval might expire by the time I’m ready to make an offer on a home.”

Correct! Pre-approval will give you a more accurate picture of how much you can afford and sellers will take you more seriously if you have a pre-approval letter. The pre-approval letter might expire, but you will have plenty of time to look for a home.
Incorrect. Pre-approval will give you a more accurate picture of how much you can afford and sellers will take you more seriously if you have a pre-approval letter. The pre-approval letter might expire, but you will have plenty of time to look for a home.

What, Why, How Check your understanding

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