Step 2 - Get
Preapproved or Prequalify for a Loan
Are your ready to start looking? Not Just yet! Even though you have your list of features you desire in your new home, you are going to need to know in what price range to look. There are two ways to go about this. You can get prequalified or preapproved for a mortgage. Either way, you will need to contact a mortgage company.
You need to be
aware that there are some key differences between prequalification and preapproval
for a loan. Loan prequalification is a simple process. It takes into account
very basic information regarding your financial status and gives you an
amount for which you may qualify. This can be done strictly on a verbal
level or electronically over the Internet. The prequalified amount is based
solely on the information you provide. In most markets, prequalified buyers
usually hold little clout compared to preapproved buyers due to the fact
that the information given during the prequalification process is not thoroughly
investigated and therefore may be unreliable. A prequalified buyer is only
told that they might be approved for a certain amount. A preapproved buyer
is actually approved for a loan of a certain amount.
The pre-approval
process is much more involved. The lender will take all actual information
regarding your finances and will perform an extensive check on your current
financial status. This process will ultimately give you the exact amount
that you will be eligible for (depending on what type of loan you decide
to go with). Being preapproved lets the seller know that you have gone through
an extensive financial background check and there should be no unexpected
obstacles to buying the home. You can see how being preapproved would be
more attractive to a seller than just being prequalified.
2004 ChrisCosco.com . All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. Questions and comments should be sent to ChrisCosco.com