Prequalification and Preapproval – First-time Buyer Must-Haves
Post By homes4sale in Chicago Home BuyingBefore delving into the wonderful world of homeownership, first-time buyers should be familiar with the steps you need to take to prepare for the home purchasing process.
Prior to even looking at properties for sale in Chicago, buyers need to figure out how much house you can afford and the amount of mortgage loan you are qualified to receive. To do this, this first step is getting prequalified. Find a lender – this can be your bank, the local credit union, a mortgage company, or other financial lending service. The lender will then use your social security number to run a credit score report, which produces a general idea of how much you can spend on a
The next step is preapproval. This is more official than prequalification and takes a deeper look into your financial standing. To get preapproved, your lender will need the previous year’s W-2 tax form, your most recent payment stub and bank account statement, plus additional documentation if you own your own business, have alimony payments and investments, or are originally from another country, etc. As in prequalification, you will also get a letter from your lender saying you are preapproved for a certain loan amount. The letter makes you more appealing to sellers because you are already preapproved for a mortgage and it gives you good negotiating power.