The advantages of preapproval.
The differences between mortgage prequalification and preapproval are significant. Prequalifying for a mortgage is based solely on what a borrower discloses to the loan officer or broker about his/her earnings, credit score, and total assets, including what is available for a down payment. By contrast, a preapproval requires a borrower to provide documentation of his/her income and assets and everything else.
-- An important note here: depending on your qualification, the loan will have a different cost ! Shopping for a loan is therefore often elusive: one would have to apply to different lenders to truly know to compare their rates, at the same given time (rates change several times a day, within the same organization).
A preapproval means that the file has gone through the underwriter of the bank/lender. If approved, it is nearly certain that the loan will be granted to the buyer, subject to the specificities of the property itself, and a few other standard necessary conditions (like proof of insurance, and such...).
With so many homes receiving multiple offers, a preapproval is essential in today’s marketplace.
The preapproval letter should include the amount a borrower is qualified to borrow, as well as the loan officer’s contact information, and mention that the downpayment has been verified.
Current Mortgage rates
A noteworthy cause: Habitat for Humanity