1962 Evelyn Byrd Avenue
Harrisonburg, VA 22801
homes@realestatethatsells.com
Harrisonburg, VA 22801
homes@realestatethatsells.com
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Getting Preapproved
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A preapproval is your lender's written commitment to finance your home purchase up to a specific
amount. Getting preapproved is a smart move for serious homebuyers because it shows sellers that
you come to the negotiating table ready to complete the transaction.
Preapproval vs. Prequalification
A preapproval indicates that a lender has taken a detailed look into your financial background and has
committed to lend you a certain amount of money, pending specific property details. Because
preapproval includes a credit check, it's more powerful than a prequalification letter, which generally
only estimates what you can afford based on information you've provided.
What are the advantages of being preapproved?
Preapproval offers a number of advantages over waiting to apply for a mortgage until after you've
found a home. It lets you:
Who can benefit the most from preapproval?
Preapproval is a great advantage for anyone buying a home, but it can be especially useful for buyers
looking for their first home and those who are self-employed or work on commission.
How does the process work?
Before you begin shopping for a home, submit your financial information to your lending institution.
They'll review your loan application and then, if you qualify, provide you with a written preapproval for
a certain mortgage amount, down payment, and interest rate, subject to the terms of the commitment
letter. The loan commitment letter can be finalized after information about the property, including an
appraisal, is submitted.
amount. Getting preapproved is a smart move for serious homebuyers because it shows sellers that
you come to the negotiating table ready to complete the transaction.
Preapproval vs. Prequalification
A preapproval indicates that a lender has taken a detailed look into your financial background and has
committed to lend you a certain amount of money, pending specific property details. Because
preapproval includes a credit check, it's more powerful than a prequalification letter, which generally
only estimates what you can afford based on information you've provided.
What are the advantages of being preapproved?
Preapproval offers a number of advantages over waiting to apply for a mortgage until after you've
found a home. It lets you:
- Shop for a home with the confidence of knowing exactly how much you can afford.
- Take advantage of the preference many home sellers have for preapproved buyers.
- Find out about possible qualification problems early in the homebuying process.
Who can benefit the most from preapproval?
Preapproval is a great advantage for anyone buying a home, but it can be especially useful for buyers
looking for their first home and those who are self-employed or work on commission.
- First-time homebuyers. Without a record of previous mortgage payments, sellers may see first-time
homebuyers as less likely to obtain financing than a similar buyer who's already demonstrated the
ability to meet a monthly mortgage payment. A preapproval helps even the field by showing the
seller that a lender has already run the numbers and is willing to proceed with the transaction. - Self-employed buyers or commissioned employees. Because their incomes may fluctuate more
dramatically, self-employed and commissioned buyers often lack the financial documentation of
salaried employees, which can send up a red flag to some sellers. Showing that a lender has already
considered these factors will help mitigate this risk.
How does the process work?
Before you begin shopping for a home, submit your financial information to your lending institution.
They'll review your loan application and then, if you qualify, provide you with a written preapproval for
a certain mortgage amount, down payment, and interest rate, subject to the terms of the commitment
letter. The loan commitment letter can be finalized after information about the property, including an
appraisal, is submitted.
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