One important part of the home buying transaction is the preapproval process for loans.
What this essentially means is that a lender has briefly looked over your finances and has determined that you are able to qualify for a loan based on the financial facts that you have presented.
However, a further look at your credit history will still need to be made but a preapproval is generally a good sign.
Does this mean that all lenders will approve me? Many people often make the mistake that a preapproval from one lender automatically means that all lenders will issue financing.
However, this is simply not the case as all lenders use different criteria that vary from one company to the next.
For example, one lender may have more leeway with your credit history while another may focus more on your income and expenses.
What complicates the process even more is that lenders are free to choose their criteria so there is no standard in terms of how loans are issued.
Just because you have preapproval from one lender does not mean that you can march into the office of another lender expecting them to honor it.
If you want to get preapproval from multiple lenders then you need to repeat the approval process.
Tips to consider before applying for a loan Seeking preapproval from several different lenders can take up a considerable amount of time and energy from you.
So to prevent this from happening make sure that you compare the different terms, rates and conditions among different lenders.
However, you will not know anything for sure until you actually speak with a lender in person so choose the one where you think you will get the best deal.
If you have spoken with a lender and they gave you higher rates than expected then you are not obligated to stick with that lender.
In fact, it is highly recommended that you go with another lender but keep in mind that you will need to go through their approval process.
Working with a reliable lender is essential as you are going to be the one who has to pay for the mortgage.