What’s the difference between prequalified and preapproval?
If purchasing a home is in your future, two important steps in the homebuying process include getting prequalified for a loan and getting preapproved.
While both provide a borrower with an estimate of how much house they can afford to buy, they are not the same thing.
What does it mean to be prequalified for a home loan?
Getting prequalified for a home loan can give you a good estimate of how much house you can afford. If you just started thinking about buying a home, a prequalification is a great first step. Remember, though, the amount you are prequalified for is just an estimate.A prequalification is typically done with self-reported information given to a lender, such as overall financial picture including income, debts and assets. Getting prequalified doesn’t require a credit check or review of your financial bank statements.
How do I get preapproved for a home loan?
If you are further along in the homebuying process, next up is getting preapproval from a lender for a home loan. Getting preapproved for a home loan is more official, and it lets a seller know you are a serious buyer.Getting preapproved for a home loan starts by filling out a mortgage application. In this process, you’ll be asked to provide a variety of personal information and financial documents, including bank statements, proof of income and assets, employment verification, a list of liabilities (student loans, credit card debt, etc.).In addition, a hard credit inquiry will be made to verify your credit history.