by Nutan Brown
on Thursday, September 9th, 2021 at 12:57pm.
A mortgage preapproval is an important part of the home buying process. If you are pre-approved, it means that you qualify for a mortgage loan based on the information you have provided. Here is a breakdown of how to get pre-approved for a mortgage.
What is the mortgage preapproval process?
The mortgage preapproval process may be divided in various steps. Different lenders have different definitions and criteria for each step they offer. It is important to shop around, so you can compare options offered by different lenders.
During this process, the lender will look at your finances to determine the maximum amount they may lend you and at what interest rate. They will ask for your personal information, various documents and will likely run a credit check.
You can get a mortgage preapproval from mortgage lenders and mortgage brokers. Mortgage lenders lend money directly to you, while mortgage brokers do not. Instead, they arrange transactions by finding a lender for you.
Some lenders only offer their products directly to borrowers, while some mortgage products are only available through brokers. Since brokers have access to many lenders, they may offer a wider range of mortgage products to choose from.
What to consider during the preapproval process?
The preapproval amount is the maximum you may get for a mortgage, but it doesn't guarantee that you'll get a mortgage for that amount. The approved mortgage amount will depend on the value of the property and the amount of your down payment. You can also look at properties in a lower price range so that you don’t stretch your budget to its limit.
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