Does A Preapproval Guarantee A Mortgage Loan?
Before your real estate agent begins showing you homes for sale, they will ask for your preapproval letter. If you do not have one, you will need to get one. A preapproval letter from a lender shows that you are a qualified buyer, but does it guarantee that you can get a mortgage loan? The answer is no. Here are several vital things to know about preapprovals and approvals with mortgage loans.
How Preapprovals Work
A preapproval in the mortgage industry is not the same thing as an approval for a home loan. Yet, it is a vital part of the home-buying process. If you want to view homes for sale with a real estate agent, the agent will require a preapproval. A preapproval is something you can get from a home loan lender. The lender will ask you to fill out an application and provide proof of income. They will check your credit and evaluate your finances. If you meet all the lending requirements they have in place, they will give you a preapproval. You can use this letter to certify that you qualify for a loan and to prove you are a qualified buyer.
How Approvals Work
After choosing a house, the lender will begin the approval process. The approval process involves more steps than the preapproval process. The lender evaluates every part of your finances, and the loan gets sent to underwriting. The underwriting department also evaluates every aspect of your finances. If you meet all the requirements, they will approve your loan.
Ways to Avoid Losing Your Preapproval
From the time you get a preapproval to the time you need an approval, things can change. If you want to prevent losing your preapproval, you will need to do a few things. First, you will need to protect your credit. Decreases in your credit score could cause the lender to deny giving you a loan. You must also avoid borrowing money through loans, as this can also change your financial picture. Finally, you should avoid changing jobs. Changing jobs can also result in losing your approval. Major changes can prevent you from getting approved for a mortgage even if you get preapproved before you started viewing homes.
A mortgage loan is a vital tool you need to purchase a home. If you would like to begin the process, talk to a mortgage loan lender. They can help you complete the application and apply for a home loan.