Find out how much house you can borrow before you start looking – and how you can make the strongest offer possible on the property you choose. If you’re ready to make your dream of owning a home a reality, you’ve probably already heard that you should consider getting prequalified or preapproved for a mortgage. It’s time to understand exactly what each of those terms means and how they might help you. And when you’re working toward a goal this big, you want every advantage. You may qualify to borrow more money than you are comfortable spending on a home. But that doesn't mean you have to spend more. It's a good idea to limit
your home search to houses priced at an amount you can comfortably afford. Explore the mortgage amount that best fits into your overall budget by using Bank of America's Home Affordability Calculator. What is mortgage prequalification?Prequalification is an early step in your homebuying journey. When you prequalify for a home loan, you’re getting an estimate of what you might be able to borrow, based on information you provide about your finances, as well as a credit check. Prequalification is also an opportunity to learn about different mortgage options and work with your lender to identify the right fit for your needs and goals. What is mortgage preapproval?Preapproval is as close as you can get to confirming your creditworthiness without having a purchase contract in place. You will complete a mortgage application and the lender will verify the information you provide. They’ll also perform a credit check. If you’re preapproved, you’ll receive a preapproval letter, which is an offer (but not a commitment) to lend you a specific amount, good for 90 days. Homebuyer tip:Expect surprises! Lenders look at every detail of your finances when granting preapproval. You might be asked about a car loan payment you made with a credit card, for example. Be prepared to answer lender questions as soon as they come up.
How long does prequalification or preapproval take?Aside from their distinct roles in homebuying, prequalification and preapproval can take different amounts of time. Prequalifying at Bank of America is a quick process that can be done online, and you may get results within an hour. For mortgage preapproval, you’ll need to supply more information so the application is likely to take more time. You should receive your preapproval letter within 10 business days after you’ve provided all requested information. What information do I need to provide?
Which is right for me?First-time homebuyers are more likely to find that getting prequalified is helpful, especially when they are establishing their homebuying budget and want an idea of how much they might be able to borrow. Preapproval can be extremely valuable when it comes time to make an offer on a house, especially in a competitive market where you might want to stand out among other potential buyers. Again, a seller will be more likely to consider you a serious buyer because you have had your finances and creditworthiness verified. PREQUALIFICATION VS. PRE-APPROVAL COMPARISON
You’ve got your pre-approval from the bank and know your borrowing capacity. Great, what’s next? Read below for our guide on the next steps you should take:
If you have any questions along the process of purchasing your property make sure you contact your mortgage broker and conveyancer for advice. Happy house hunting! What do you do after getting preThe lender will then use these documents to determine exactly how much you can be preapproved to borrow. Once you're preapproved, you'll have 90 days to find a home you love. Then you can lock your rate and complete your application.
Does preA pre-approval offer suggests you've passed the first step in the screening process. But remember — you can't actually be approved for the card unless you apply. You may seem like a promising candidate, but the lender will likely want more information to process your application.
How long after preGetting your pre-approval letter could take anywhere from a few days to a few weeks. On average, it usually takes less than 10 days. If you have everything in order, and your credit is good, you can get it in 1 or 2 days. How long does the underwriting process take?
Does being preapproved for a loan mean you'll get it?When you're pre-approved for a loan, it means the lender provisionally agrees to lend you the money, based on the preliminary information you give them. It doesn't mean you are guaranteed to get the loan. Final approval for the loan will be subject to a hard credit check and other final checks.
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