Smart Borrower Center
Tools to help you borrow better
Now that you’ve chosen your lender, you’ll want to get preapproved. Preapproval means that your lender has thoroughly checked your finances, including your income and debts, and has given you the thumbs up for a loan of a certain amount. There may be a timeframe on your pre-approval, so be sure you know how long it lasts.
Your lender can give you a preapproval letter, which will make it easier to shop for a home. With preapproval, you won’t have a loan contingency as part of your offer, meaning it’s likely more attractive to the seller, even if it’s not the highest price. Preapproval also expedites the home buying process, as much of your loan paperwork is already taken care.
Remember, prequalification is not the same as preapproval. Prequalification is an estimate of how much you can afford and the figure is not guaranteed. Prequalification is a good step to take in the home buying process because it can narrow down the homes you look at, but ultimately, it does not take into consideration you entire financial picture. Preapproval is a more thorough and official look at your finances, so don’t assume that because you prequalify for a certain amount, you will be preapproved for the same figure.
Step 5: Compare mortgage offers.
Next step: Lock in your interest rate and points.
Published on September 05, 2006