Readers: This is article 24 of 25 from my no-nonsense “Mortgage Basics” quick-reference series.
The difference between being prequalified or preapproved for a home loan can be a critical factor in determining whether or not you’ll get the home of your dreams. In short, prequalified homebuyers are far less attractive to sellers than shoppers who are preapproved.
Even so, if you’re interested in only getting prequalified for a mortgage, it’s a simple process that is almost always provided free of charge. Here’s all you need to do:
Make sure you’re ready. Deciding to own a home is a big responsibility — so make sure you’re really up to the task before committing.
Check your credit report. It’s important to make sure there are no mistakes on it because borrowers with the best credit scores get the lowest rates.
Shop for a lender. Today, online shopping makes it easy to compare rates and loan options.
Provide information. Your lender will ask you a series of questions regarding your income, assets and any debts you owe. No documentation is required.
Get prequalified! The lender will then use the information you provide to give you a preliminary non-binding estimate of how much you can borrow.
Photo Credit: GotCredit