2.GET PRE-QUALIFIED AND PRE-APPROVED
Now that you have your list of features you want in your new
home, you are ready to start looking! Well, not just yet. 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. There are some key
differences between prequalification and preapproval for a loan that you need
to be aware of. 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. Where a preapproved buyer is actually approved
for a loan of a certain amount, a prequalified buyer is only told that they
might be approved for a certain amount.
Pre-approval is a much more involved process. The lender will take all pertinent
information regarding your finances and perform an extensive check on your
current financial status. This 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.
