Buying overview -> Get preapproved

Get preapproved

Getting approved in advance can make the difference in your offer
being accepted over competing offers, even ones at a higher price.

The terms ‘prequalified’ and ‘preapproved’ are often misunderstood. Prequalification means that a loan officer has discussed your qualifications with you and given you guidance about the price range for which you are qualified. This can be a good initial step when you are considering whether you are ready to purchase a new home.

Preapproval is a much more detailed review of your financial situation than a prequalification. It indicates that a loan underwriter – not just a loan officer – has reviewed all of your loan documentation and been able to request all the additional supporting documentation necessary to quickly obtain a final loan approval when you do identify a property. This underwriting review lets your loan officer know exactly the maximum monthly housing expense for which you qualify; it will also bring to light and allow you to deal in advance with any issues in your financial situation that might delay a closing.

When you start to look seriously at buying a property you want to be preapproved.

What is a preapproval?

A preapproval is a commitment to provide financing subject to an appraisal and a final underwriting review after you are in contract on a property. If you are approved before you buy – not just prequalified – your offer will be more competitive, the purchase process will be smoother, and in a competitive real estate market you will be much more comfortable meeting the necessary timelines.

 

Steps to a prequalfication:
Steps to a preapproval:
Read Finding a lender. Then go to Info needed for a quote. Read Finding a lender and then go straight to Applying.

The prequalification/preapproval process not only makes your offer stronger, but also gives you the time to consider loan options and strategies. The price of the home you can afford, the size of the mortgage you qualify for, and the amount of the down payment you will need may vary, depending not only on interest rates, but also on the loan program and lender you choose. It’s beneficial to go through the process, ask a lot of questions, and understand your options before you get into contract. For example, you could be preapproved for a more expensive house than you thought possible, but the trade-off may be a mortgage payment that leaves you financially strapped. During the preapproval process you will be presented with options, and have the time to consider the best course.