How to Get Preapproved for a Home Loan

According to Lending Tree, to be pre-approved for a FHA loan, the borrower is required to fill out a mortgage application. This application usually requires a fee. The lender will then look into the borrower’s financial status and credit ratings. If approved, the lender will tell the borrower their exact mortgage amount.

In an article by the New York Times, mortgage preapproval is harder to get.  Lenders are hesitant to give out preapprovals as easily as in the past because they do not want to get ‘locked into’ closing costs, especially in a time where the housing industry is down. Foreclosures are rampant across the nation, particularly in the state of Arizona. Loan modifications are also on the rise because people are doing everything in their power to stay in their homes. The article states that mortgage experts say that borrowers need to ask their lenders more questions about what the preapproval process entails. Borrowers need to push for a pre-approval, not pre-qualification. The reason for this is because a preapproval can highly speed up the purchase process.

SmartMoney offers seven tips for getting a preapproved mortgage.

1. Shop around. And shop early.
2. Prepare your financial paperwork.
3. Know you do not have to stick to one lender.
4. Don’t expect a rate quote.
5. Keep an eye on your credit score.
6. Deal only with a reputable lender.
7. Watch the clock.

If you get loan approval and are less than happy with the terms you’ve received, be diligent about paying on time for at least a few years. Making timely payments for a while on a mortgage with a high interest rate means you may be able to qualify for a HARP loan in the future. A HARP loan is something that was introduced in 2008, and if you qualify, there’s a good chance your interest rate and monthly payments on your mortgage will be lowered. The HARP program is generally considered better than opting for a traditional loan modification, but you can’t get approval if you’re always late on your mortgage payments.