Mortgage Prequalification and Preapproval

Everybody benefits when you get preapproved for a Mortgage. By everybody, we mean you, your agent, and the seller.

You: Preapproval gives you confidence and knowledge. You have the confidence to know you will be able to get the loan you need. And you have the knowledge of exactly how much you can afford. When you are preapproved the lending institution will tell you the maximum amount they will finance. They go through the work of evaluating your income, credit history, debt and so on. And their guess as to what you can afford is probably just as accurate as yours could be. But don't automatically take the full amount they offer. It's almost always best to buy a house that costs slightly less than the largest loan you can obtain. This allows you some extra breathing room, and also some extra cash to help furnish the home and take care of unexpected expenses.

Your Agent: If you're preapproved your agent will know exactly what types of houses you can afford. You'll spend a lot less time looking at ones you can't buy. And the agent will spend less time trying to talk you into purchasing something out of your price range.

The Seller: Sellers love prequalification. They will often accept a slightly smaller offer from a buyer who's prequalified, simply because of the guarantee that they'll be able to obtain financing. It shows the seller that you're serious about purchasing a home, and that if you decide too, you'll really be able too.

Finding Preapprovals: Virtually every lender will preapprove you. You can start the process in person, or you can usually do it online.