Getting preapproved for a home mortgage loan is one of the first steps to becoming a homeowner. Getting a loan preapproval will let you know how much money you can afford when buying a home, and can help you determine which home is the best for you.
During preapproval, the lender looks at your credit report, personal assets, and income to ensure that you can and will make your payments on time. Once you find the perfect home, your lender will have to make sure the home is appraised for an amount greater or equal to the purchase price.
Why is it important to get preapproved? Having a preapproval letter from your lender makes you look like a serious buyer. The letter indicates that your loan will be approved once you put an offer on a home and submit the required documents. Sellers take preference to those who have preapproval letters, so this can give you an advantage in a competitive market.
When trying to obtain a mortgage loan preapproval, it is recommended that you have income information, asset information, and personal information available for your lender to make a decision. You can retrieve your credit report three times a year from AnnualCreditReport.com.