It’s smart to get preapproved for a loan before you start shopping for big-ticket items like a mortgage or a car.1 Getting preapproved for a loan means that you know how much money a lender is willing to provide, at what rate, and on what terms. It’s a way to find out what kind of financing you’re qualified for before you go too far down the wrong path.
Preapproval involves submitting a preliminary application to a lender that will review your credit, your income, and other factors, while also telling you which loans are available to you. As a result, you can focus solely on loans that you’re likely to qualify for, while also having a better idea of which price ranges you should stay within.
- Preapproval should ALWAYS be free
- Preapproval means your lender actually reviews your financial picture to determine what you qualify for
- Preapproval allows you to focus on purchases you know you can afford
- Preapproval doesn't obligate you to borrow the money
- Preapproval can be a HUGE negotiating edge when shopping for your new home.