Before you start house hunting, you
need to determine how much house you
can afford, which will entail
getting preapproved for a home loan.
A real estate agent can help you
find a mortgage broker to begin the
process. While getting preapproved
is a more in-depth process, a
preapproval letter lets both real
estate agents and sellers know that
you’re a serious shopper who means
business.
What do I do to get preapproved?
Getting preapproved requires that
the lender review your finances,
confirming pay stubs, tax records,
credit accounts, bank statements and
sometimes more. The
preapproval amount will not only be
a reliable estimate of what you can
afford, but your preapproval also
indicates that a lender is willing
to do business with you, pending the
purchase price, market appraisal and
the underwriting process. You can also get prequalified for
a loan, which means that a lender
has taken some information from you,
and made a tentative decision
without necessarily verifying any
the information. Prequalification
provides you with a quick estimate
of the amount you can afford, but is
not considered as reliable as
preapproval.
What should I ask when shopping
for a lender?
Your real estate agent should have a
mortgage broker they are willing to
put you in contact with — this
lender will be someone they have
done business with in the past, and
feel comfortable
recommending. However, if you decide
to do a little comparison shopping
and look for a lender on your own,
here are a few important questions
to ask.
- What loan programs do you
offer and which one do you think
is best for me?
- How long will the loan
approval process take?
- What line items of the loan
agreement — if any — are
negotiable?
- What is your policy for
locking in interest rates, and
will you honor a lower rate if
it declines during the lock-in
period?
- Are there fees for prepaying
on my loan?
