Step 2 of our tips for home buyers from your OzarkHome.com real estate team.

Step 2: Prequalify vs. Preapproval

What is the difference?

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Step 2 - Get Preapproved or Prequalified for a Loan

Preapproved is better than prequalified and helps you get the home you want.
Now that you have your list of features you want in your home, you are ready to start looking! Well, not just yet. You are going to need to know in what price range to look. There are two ways to go about this. You can get prequalified or preapproved for a mortgage.

Either way, you may want to contact a mortgage company or our team can assist you. There are some key differences between prequalification and preapproval for a loan that you need to be aware of. Loan prequalification is a simple process. It takes into account very basic information regarding your financial status and gives you an amount for which you may qualify. This can be done strictly on a verbal level or electronically over the Internet. The prequalified amount is based solely on the information you provide. In most markets, prequalified buyers usually hold little clout compared to preapproved buyers due to the fact that the information given during the prequalification process is not thoroughly investigated and therefore may not be reliable. Where a preapproved buyer is actually approved for a loan of a certain amount, a prequalified buyer is only told that they might be approved for a certain amount.

Pre-approval is a much more involved process. A lender will need all pertinent information regarding your finances and perform an extensive check on your current financial status. This will ultimately give you the exact amount that you will be eligible for (depending on what type of loan you decide to go with). Being preapproved lets the seller know that you have gone through an extensive financial background check and there should be no unexpected obstacles to buying the home. You now see how being preapproved would be much more attractive to a seller than just being prequalified. And when you may be competing with other buyers for the same house your being preapproved just might make the difference in gettting the home you want!

One very important suggestion about home loans, be sure to obtain the Good Faith Estimate (GFE) and the Truth In Lending (TIL) statements from your lender. These documents may save you from having additional fees charged to you at closing. We also recommmend that you consider giving a copy to your buyer agent so they can use it to compare with the HUD-1 prior to closing.

on to step 3:

E-mail us with your questions anytime—we guarantee you'll get a personal answer from us within 24 hours. Or call and come have a cup of coffee with us. We promise you'll be glad you did!

Larry and Marilyn Daniel, REALTORS® Toll Free 1-800-743.4476 ext. 7117

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Murney Associates, 620 W. Republic Road, Springfield, MO 65807 1-417-882.6222

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