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Be PreApproved

A lot of home buyers are entering the housing market. This interest is being driven by low interest rates, declining home prices, and the tax stimulus. To have the best chance of getting the house you want, you should be pre-approved for your home loan.

 

There is confusion between and Prequalification for a home loan means that you provide information to the lender concerning credit standing, annual income, employment history, and debts. On the basis of this information, the lender prequalifies you for a home loan up to a maximum dollar amount. This information helps you and your Realtor search for a house that is affordable and eliminates those homes beyond your budget.

 

A preapproved home loan is very different from a prequalification. A prequalification is done on the basis of the information you provide to the lender. The information is not verified for accuracy. Preapproved home loans involve the same steps in the prequalification process, however additionally you must complete an application and provide all the documentation to support the application information. Your credit report is reviewed and the information you have provided is verified. Employment, income and debts are all checked. This report is sent for approval to an underwriter. Once you receive a preapproval, it becomes very easy for you to get a home loan. Once you receive a preapproval, do not go and purchase a new car, or make other large expenditures. Your credit report is pulled again immediately before the home loan is granted to you, and if your credit score has been negatively impacted, the preapproval will not be able to help you purchase the home of your dreams.

 

This saves a lot of your time in finding the right price home and the right kind of home loan. This will also let you know up front what you will be expected to have at closing so there will be no surprises. A preapproval puts you on par with a cash Buyer as you are as good as cash excepting for the appraisal of the home you are buying. This also puts you in a better negotiating position when you find the home you wish to buy.


Written on 2009-07-29


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