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2. Get
Pre-Qualified or 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. |
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