What’s the Difference Between Preapproval and Prequalification?
Chances are that if you are beginning to get serious about purchasing your own home, you have heard people suggest that you should first get preapproved or prequalified for a loan to give you an advantage over other homebuyers, but what exactly does that mean? If you are looking to buy a home in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and want to learn what steps you need to finalize the purchase of your dream home, Foundation Mortgage can help. Read on to learn more about mortgage preapproval and prequalification. Contact us today with any questions or to get started.
Loan Prequalification: The First Step to Buying a Home
Becoming prequalified for a mortgage is the first step in the homebuying process, and gives you a general idea of the loan amount that you will be able to qualify for. To get prequalified for a mortgage, you will have to give your financial information to a lender, including details about your income, your debt, and any assets you may have so that you can better understand how much money you will potentially be able to borrow. Prequalification is typically free, and can be conducted online or over the phone. During the process of prequalification, you can discuss with your lender your housing type and payment options, and they can determine what type of mortgage would work best for you. An official credit report is not usually required during prequalification and is based on the information you give the lender, so you will want to make sure you are offering accurate information to determine the actual price range you can afford.
Loan Preapproval: The Second Step to Getting a Mortgage
After you become prequalified for a loan, the next step will be getting loan preapproval, which is a more comprehensive examination of your financial situation. When seeking loan preapproval, you will be required to complete a mortgage application, and provide proof of your income, debt, and extra assets, and any other information regarding your monthly expenses. An official credit report will be required for loan preapproval. Once you have met all of the necessary requirements and your lender has a better understanding of the types of loans you will be able to obtain, you will receive a preapproval letter. You can then show the letter to a home seller when you go to make an offer on a home, proving to the seller that you are serious about purchasing the home and that you can afford the payments, giving you an advantage over other potential buyers.
Get Help Today Purchasing a Home
If you are taking the initial steps to buying a home in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and would like help with loan prequalification and preapproval, Foundation Mortgage is here to help. Contact our office today for a consultation.