Why You Should Get Preapproved Before House Hunting

Before starting your home search, talk to a lender about getting preapproved for a mortgage. This step can save you time during negotiations and help you stay within budget.

Preapproval vs. Prequalification

A preapproval is more thorough than a prequalification. A prequalification gives a general estimate, but the lender does not pull your credit. This means the final loan amount might differ, especially if your credit score is low.

If you are casually browsing, a prequalification may be enough. However, if you plan to make a serious offer, a preapproval letter will make the process smoother.

How to Get Preapproved

Start by finding a reputable lender, such as a bank, credit union, or private lender. Ask friends, family, neighbors, or coworkers for recommendations. Then, ask your chosen lender what they need from you. Usually, they will require:

• A completed application

• Authorization to pull your credit

• Financial documents, such as pay stubs or W-2s

• Details about outstanding debts, like student loans, car loans, or credit cards

Benefits of a Preapproval Letter

A preapproval letter helps your Realtor or real estate agent show you homes within your budget. It also demonstrates to sellers that you are ready to buy. Including the letter with your offer can strengthen your position, especially in a competitive market or bidding war.

After Your Offer Is Accepted

Once your offer is accepted, you begin the full mortgage application process. The lender will check the home’s appraised value, inspect its condition, and review your finances in more detail. Some lenders require that the home meets certain habitability standards before approving the loan.