Mortgage basics for homebuyers: Online preapproval & more

When preparing to buy a home, many potential buyers turn to online preapproval to jumpstart their loan process. While it’s a good idea to compare multiple lenders to find the best down payment option and interest rate, getting mortgage preapproval online can have its advantages.

What is mortgage prequalification? 

Prequalification for a mortgage is based on a basic overview of your financial situation and the types of loans available to you. Prequalification is helpful for potential borrowers who want to know their options before getting into an official vetting process.

What is mortgage preapproval?

Mortgage preapproval is the official statement from a lender showing you’re financially equipped to pay for a specific loan. Unlike prequalification, mortgage preapproval requires official financial documents like bank statements, pay stubs and W-2s. It also involves a credit report to gain insight into your financial details.

Can you get preapproved for a mortgage online?

Many lenders offer online application processes for gaining a preapproval letter. Some lenders operate entirely online, making the process extremely convenient and streamlined. However, you still need to provide specific documents, so it’s best to gather this information beforehand to ensure it goes smoothly. 

Why a mortgage preapproval letter is important

While preapproval doesn’t immediately give you the money to buy a home, it’s an important step to take in your homebuying journey. Not only do many real estate agents require proof of mortgage preapproval before helping your home search, but it will give your eventual offer more weight in a competitive market.

Getting preapproved for a mortgage loan also means you’ve done most of the work for your mortgage ahead of time, and won’t need to do as much work during closing. This can make your buying process much smoother and quicker, giving you more time to focus on moving into your dream home.