Is Getting Preapproved Just About a Mortgage?
When buying a home, what’s the difference between prequalification and preapproval? Prequalification is the first stage of the home buying process. Lenders assess your financial status to get a basic idea of what your mortgage could be. This includes whether you have a steady income and how long you’ve been employed.
Preapproval is a much more in-depth process that includes completing an official mortgage application. The lender will perform an extensive check on your financial standing. This process allows the lender and everyone involved to get an idea of whether you can afford a house. However, getting preapproval is not just about qualifying for a mortgage. Here are the reasons why:
Know what you can and cannot afford
When you are preapproved, you gain an understanding of what your mortgage could be, and if you can handle it. Once you know what you can afford, your house-hunting will become more productive.
The early bird gets the worm
Getting preapproved can help you get a leg up on other home buyers who are interested in the same house you are—especially if you’re in a seller’s market. Preapproval ensures a smoother bidding process for the property that you want.
More leverage with home sellers
As a preapproved home buyer, you’ve already established trust with mortgage loan companies. Home sellers find preapproved buyers trustworthy and more attractive to do business with.
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