| 2. Get Pre-Qualified or Pre-Approved
Now that you have your list of features you want in your new home, you are ready
to start looking! Well, not just yet. You are going to need to know in what price
range to look. There are two ways to go about this. You can get prequalified or
preapproved for a mortgage. Either way, you will need to contact a mortgage
company. There are some key differences between prequalification and preapproval
for a loan that you need to be aware of. Loan prequalification is a simple process.
It takes into account very basic information regarding your financial status and
gives you an amount for which you may qualify. This can be done strictly on a
verbal level or electronically over the Internet. The prequalified amount is based
solely on the information you provide. In most markets, prequalified buyers usually
hold little clout compared to preapproved buyers due to the fact that the information
given during the prequalification process is not thoroughly investigated and therefore
may be unreliable. Where a preapproved buyer is actually approved for a loan of
a certain amount, a prequalified buyer is only told that they might be approved
for a certain amount. Pre-approval is a much more involved process. The
lender will take all pertinent information regarding your finances and perform
an extensive check on your current financial status. This will ultimately give
you the exact amount that you will be eligible for (depending on what type of
loan you decide to go with). Being preapproved lets the seller know that you have
gone through an extensive financial background check and there should be no unexpected
obstacles to buying the home. You can see how being preapproved would be more
attractive to a seller than just being prequalified.
| 
