While it can be fun to idly shop around for a home, any serious home buyer begins by getting preapproved for a mortgage. This is an important first step to shopping for a home because you get the chance to discuss loan options with your lender and find out how much you are approved to borrow. The lender will also check your credit and let you know if there are any problems you should be aware of and fix.
A preapproval is much different than a prequalification. When you get prequalified, the lender will rely on information you provide to estimate how much you qualify to borrow. When you get preapproved, the lender verifies your information and documentation to figure out exactly how much they are willing to lend you.
You will need the same documents to get preapproved as you will to get a mortgage. These documents are outlined below.
Keep in mind a preapproval from a bank is not necessarily a loan commitment, but it will speed up loan approval and underwriting later.
A large number of buyers begin shopping for homes -- and even making offers -- without getting preapproved. This can be a big mistake when you find a home you love and want to make an offer. Many agents and sellers will reject offers immediately from buyers who are not preapproved from a bank. This isn't surprising, considering how often these transactions can proceed for some time before it becomes apparent that the buyer cannot actually obtain a mortgage and the deal falls through.
Expect to provide the following when you contact a lender for preapproval for a mortgage.
Your lender will request a copy of your driver's license, your Social Security number and your signature to obtain your credit report.
You may also need to provide additional paperwork and documents as the pre-approval and loan process progresses. The faster you respond, the sooner you can begin planning your move.