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Either
way, you will need to contact a mortgage company. There
are some key differences between prequalification and
preapproval for a loan that you need to be aware of.
Loan prequalification is a simple process. It takes
into account very basic information regarding your financial
status and gives you an amount for which you may qualify.
This can be done strictly on a verbal level or electronically
over the Internet. The prequalified amount is based
solely on the information you provide. In most markets,
prequalified buyers usually hold little clout compared
to preapproved buyers due to the fact that the information
given during the prequalification process is not thoroughly
investigated and therefore may be unreliable. Where
a preapproved buyer is actually approved for a loan
of a certain amount, a prequalified buyer is only told
that they might be approved for a certain amount.
Pre-approval
is a much more involved process. The lender will take
all pertinent information regarding your finances and
perform an extensive check on your current financial
status. This will ultimately give you the exact amount
that you will be eligible for (depending on what type
of loan you decide to go with). Being preapproved lets
the seller know that you have gone through an extensive
financial background check and there should be no unexpected
obstacles to buying the home. You can see how being
preapproved would be more attractive to a seller than
just being prequalified.
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