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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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