If you are interested in buying a home, you may be wondering what initial steps you need to take in order to obtain a mortgage to help you finance your purchase. In order to give yourself an advantage over other potential homebuyers, you may have heard that you should first get mortgage preapproval or prequalification. If you want to learn more about the differences between preapproval and prequalification in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, Foundation Mortgage is here to help. Contact us today to determine the steps you need to take in order to purchase your home.
The First Step: Prequalifying
A mortgage prequalification is the first step in the home buying process, and gives you a general idea of the loan amount you will qualify for. Prequalification is usually a quick process that is free and can be done online or over the phone. In the prequalification process, you provide your financial information to a lender, and factors such as your income, assets, and amount of debt are reviewed. Prequalification typically does not require a credit report and is based solely on the information you provide, so it is important to supply accurate financial information during the process so that you understand the actual price range you are able to afford. After evaluating this information, a lender can give you an estimate about how much money you will likely be able to borrow. Getting prequalified for a mortgage gives the borrower a sense of how financially prepared they are to buy a home and serves as an introduction for your mortgage options.
The Next Step: Mortgage Preapproval
After getting prequalified for a loan, mortgage preapproval takes the process to the next level and involves a more comprehensive evaluation of your financial history and current financial circumstances. In order to be preapproved, you need to complete an official mortgage application and provide proof of your finances. You will need to provide the necessary documentation, including current pay stubs, W-2’s, and a list of assets and monthly expenses so that the lender can verify your income and debt. A credit report will also be required in the preapproval process. Once you satisfy the requirements, you will receive a preapproval letter containing information regarding the type of mortgage your lender will offer you and the amount of money you are able to borrow. Then, when you are making an offer on a home, you can show the preapproval letter to the seller, which demonstrates to the seller that you are serious about buying the home, offering you an advantage over other buyers.
Get Help With Mortgage Prequalification and Preapproval
If you are ready to take your first steps to buying a home in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, contact Foundation Mortgage today. Our loan specialists can help you understand the mortgage process, and help you determine the best financing options for your situation.