In today's market - knowing how much house you can afford before you start looking is super important for you the buyer, your Realtors, and the homeowners whose houses you are going to view.
Getting prequalified is a great first step, but taking the process farther to preapproval is even better. What do these terms mean that we hear so often?
Being prequalified does not mean you have a commitment from a lender - it's merely an indication of how much home you can afford. This term means a lender has looked at your income, debt load, employment history and any downpayment you have and determined the best type of loan and the $$ amount you will likely qualify for.
Now the preapproval process is more in depth. If you are a preapproved buyer, you actually have a lender's written commitment to grant a loan to you as soon as certain conditions are met. The final steps to purchase would be obtaining a buy/sell contract, a satisfactory appraisal and of course a clear title report.
Sellers consider preapproved buyers as preferred customers because you have taken the guess work out of whether or not you can obtain financing. Oftentimes, if an offer from a preapproved buyer comes in and another offer comes in, at the same time, from a buyer without preapproval - the buyer who has done their homework is likely to get the strongest consideration.
Alice and Jim Hayes are Licensed Realtors with Loveless Realty in Libby, MT. Please call us at 406/293-8364 or 293-1926 or visit our 24-hour open house at www.alicehayes.com
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