After I entered the job force at 18, I had money problems for quite a number of years. I earned a decent income, but I lived paycheck to paycheck and just felt like I would never get ahead financially. One day, determined to get ahead, I decided to record every purchase I made for a month to find out just where my money was going. I learned a hard lesson that day that small purchases here and there throughout the month really add up. I committed to a much smaller budget and began stashing savings away. Then, I researched the world of investing and made a few strategic ones with some of my savings. I am now doing much better financially, and I want to help others who need it, so I am starting a blog. Come back often for money management tips and tricks explained simply!
If you decide to buy a house and talk to a real estate agent about it, the agent will probably suggest going to a mortgage lender first to work on getting preapproved. Taking this step will involve filling out an application and may take some time, but it is very important to do. Here are some things that you need to know about a mortgage preapproval.
A preapproval guides you with a budget
To get preapproved for a mortgage loan, you will have to apply for a loan first, and this process may involve numerous steps. One step will be filling out a mortgage loan application, and this will also require completing a financial statement. Once you complete all the steps, the lender can evaluate your financial state and give you an answer about a loan. If you appear to qualify for a loan, the lender will preapprove you for a loan. One benefit this offers is that it helps guide you with a budget. The preapproval does not just say that you qualify for a loan, but it also lists the amount that you qualify for, and this can be helpful when shopping for a house.
Preapproval does not guarantee a loan
One key thing to know about a preapproval is that the bank that issues it is not guaranteeing that you will get a loan. Preapprovals simply mean that people qualify for loans based on the information they supplied to the lenders, but they do not necessarily mean that the loans will go through. For a loan to actually go through, you must have a house selected for your purchase, and the entire file must get approved in underwriting.
A preapproval is not equal to a prequalification
The other important thing you should understand is that preapproval and prequalification are not equivalent. Many people will initially go to a bank to get prequalified before getting preapproved, and a prequalification does not mean that you are guaranteed a loan. In fact, it is easier to get prequalified for a loan, as this does not require submitting paperwork or filling out documents. Prequalification is something that often happens during a conversation, and it basically involves you explaining your financial situation to a lender. Based on what you say, the lender can tell you if you prequalify for a loan or not. Getting preapproved is much more secure than getting prequalified, and this is important to know.
Before you can view homes for sale, it is wise to get preapproved, as this is a common requirement by real estate agents. If you would like more information about the preapproval process and what it means, talk to a mortgage rates service company today.
Share20 November 2019
