A preapproval is important to the home buying process because it states the price range you qualify for which helps you begin the process of finding the right home at the right price. So how do you obtain a preapproval? Whichever lender you decide to use, will provide you with a preapproval which means you have provided minimal documentation and the lender has also checked your credit. Which leads to my next my point – a lender is such an important part of buying a home. You need someone that is going to be attentive, responsive, and thorough. I ALWAYS recommend Michael Wade with Movement Mortgage. He’s always willing to help, answer questions that pop up, and he makes his clients a priority. If you’re in search of a great lender, let me know and I will be happy to connect you with Michael. Movement Mortgage and most other companies allow you to conveniently apply for a preapproval online. Typically you will provide pay stubs and then the lender will do a credit report. More documentation will be needed for formal loan application but this is all you need for the preliminary preapproval. A lot of times you will get preapproved for a certain number but that doesn’t mean you will be comfortable at that price point. I always tell my clients to look at your preapproval and then figure out a mortgage that you are comfortable with. Again, this is why you need a reliable lender that you trust.
A big question I get all the time is what is the difference between a prequalification letter and a preapproval letter. In the world of real estate, we say a prequalification letter isn’t worth the paper it’s written on. Here’s why: A prequaification is solely based on information that you provide to the lender. A preapproval is based on information provided BUT the difference is that that information has been verified by your lender. Verified information is key. Being able to send a preapproval letter with an offer on a home is so crucial, especially in our current market. A seller will most likely take an offer that has a preapproval versus one that does not. It’s proof that the buyer is serious and able to obtain financing in order to buy the home.
There are so many variables that go into the buying a home. The more you know and understand these variables, the easier the process becomes. It’s also easier when you have a lender and realtors that will work hard for you and be there every step of the way. Happy home buying friends!