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10
steps to buying a home |
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Sell with
Us
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Just click
on one of the links below to go through that step in the buying process. |
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Step
2 - Preapproval vs. Prequalification |
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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. |
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