What’s the advantage of getting preapproved for a mortgage?
Q: Will getting preapproved for a home loan help me buy a home?
A: Yes, for a couple of reasons.
Preapproval is a free reality check that gives you an idea of how much you can borrow.
It should be one of your first steps in the homebuying process. The lender will look at your credit history, income, savings and debts, and decide how much you're qualified to borrow. Preapproval will prevent you from wasting time house shopping for something you ultimately can't buy.
The process is simple and usually free.
You'll usually get a letter in the mail within a week or two saying if you quality for a mortgage and how much they're willing to loan you.
Note that there is a difference between preapproval and prequalification. The latter is just a rough estimate of how much you can afford to borrow that's made without the lender checking any of the information you provide.
Sellers will take offers from preapproved buyers more seriously because they're more likely to get the financing they need to complete the purchase.
If you're bidding on a foreclosure, the bank selling the property will almost always want a letter saying youâre preapproved for financing with your offer.
Q: How does the process work?
A: You fill out a standard mortgage application that asks how much you make, for a list of your assets (such as cash, bank accounts and investments) and your liabilities (including car loans, student loans and credit card debt).
The more complicated your finances are, the longer it will take the lender to sort through and confirm everything. You could be asked to clarify or provide some additional information.
Once youâre preapproved, you usually have 30 to 90 days to find a house to buy and finalize the loan.
If you don't make an offer on a house within that time period, the lender will usually have to verify your credit, assets, income and liability again.
