The jargon that is used in the real estate industry can sometimes be difficult to understand. There are many different words, expressions, and definitions that are important to recognize when you are buying a home. For example, learning the difference between being prequalified and preapproved for a loan can help you know more about buying your first home. Hiring a professional real estate agent can help you learn all about the different terms that have to do with buying a home. We at Premier Utah Real Estate provide excellent resources to those looking to buy a home. Reach out to us today for more information.
What Does It Mean To Be Prequalified?
Getting prequalified and preapproved are both important steps in the home buying process. But what does it mean to be prequalified? When you get prequalified, you are estimating how much money you will likely be able to borrow from the bank or lender. Prequalification is not a formal process and typically uses information reported by you. However, it is a great step because it helps you understand how much it would cost you to buy a home and how much money you would need to borrow from a lender. Getting prequalified also allows you to see what financing options are available to you for your mortgage. Prequalification allows you to see if you are prepared financially to buy a home.
Prequalification is not seen as being as important for getting a loan as getting preapproved, however it can be helpful in helping you be seen as a more serious candidate for a loan if you have never bought a home before. Prequalification can be completed over the phone or online and the lender will use the information you provide.
They will not check that the information is perfect or comprehensive. That is why it is an estimate. Your actual loan may be very different from the estimate if the information you provided is not correct. The information you will need to provide in order to get prequalified includes information regarding your income and bank account, what debts and assets you hold, the amount that you will be putting down on the property, and your credit score.
What Does It Mean To Be Preapproved?
The process of getting preapproved is usually completed by the bank or lending firm as a means of ensuring that you are a good candidate for a loan. The preapproval process establishes to lenders that you are interested in buying a property. Getting preapproved involves a bank lender collecting and verifying all of your information to calculate what home would be within your budget. You become more competitive for a loan when you have gotten preapproved.
The information you will need to provide for the preapproval process is more all-inclusive than the information needed for getting prequalified. Along with the information that is required for getting prequalified, you will need to provide your driver’s license, your social security number, investment information, your monthly expenses, and your federal tax returns and W-2 statements from the past two years. Because every lender is different, it is important to speak with your specific lender to ensure you have all the information you need.
After you have submitted all of the required information, you will need to wait for a couple of weeks before the bank lender will give you their decision. Assuming that you are approved, the lender will offer a certain loan amount that they will give to you within an allotted time period. After this time period is up, or if your income or asset/debt level changes, then the lender may deny the loan or give you a different loan.
Are You In Need Of A Real Estate Agent?
Prequalification and preapproval are important parts of the home buying process. Another important step is hiring a real estate agent. Real estate agents can be a great help in finding and buying a home. We at Premier UT Real Estate provide excellent real estate services that are bound to make your life easier. For more information, reach out to us today.
