3 Steps Of Mortgage Approvals And What Each One Means
Posted on: 5 June 2017
Buying a house is not an easy process, and part of the reason for this is due to the process of getting a loan to buy the house. There are three main steps involved with getting a loan, and here is an explanation of what these are and why they are important when getting a mortgage loan.
Step 1: Get prequalified
The first step in the mortgage-approval process is getting prequalified for a loan. Prequalification is the most informal form of mortgage approval, and it does not guarantee a loan. When you get prequalified, you will basically give the lender general information about your job, income, and financial state. You may also give the lender a general idea about your credit. From these basic facts, the lender will tell you if you prequalify for a loan.
Step 2: Get preapproved
If you prequalify and want to start shopping for a house, you will need to complete the next step, which is getting preapproved. The preapproval process is similar to the prequalification process, except that it is more in depth. During this process, the lender will actually check your credit score and verify all the financial information you have supplied. Once the lender does this, you will know if you are preapproved for a loan.
Getting preapproved also does not guarantee a loan, but a preapproval is more secure than prequalification, and it is something your real estate agent will need to see before he or she begins showing you homes for sale.
Step 3: Close on your loan
If your lender preapproves a loan for you, your next step will be to choose a house to buy. Once you have made this decision and the seller has accepted your offer, you will need to start working with your lender to turn the preapproval into an approval. Getting an approval is the hardest step of all, because this is not only based on your financial state and credit, but it is also based on the house you buy. The lender will need to verify the value of the house and numerous other details before agreeing to give you a loan. Once everything is verified, you will be ready to close on the house and move in.
These three steps are very different, but they are all important. If you would like to get a loan to purchase a home, you may want to call a lender and find out if you prequalify for a mortgage. Check it out for more information.
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