When purchasing a home, it can be advantageous to get preapproved for a mortgage.
A preapproval takes the prequalification process one step further. A loan application must be completed, which is required in order to be prequalified.
The mortgage lender will review the following information: income, debt, assets, confirmed monies available for down payment and closing costs. A credit report will be run and the lender will then issue a loan approval letter to the borrower based on their review of the information.
The 'preapproval letter' can be provided to a Realtor and/or Seller. Typically, Realtors/Sellers prefer to work with people they know are able to obtain sufficient loan funds to purchase the property.
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