It can be hard to shop for a home without knowing how much you can afford. Mortgage preapproval lets you shop smarter and make stronger offers. Let’s look at what it means to get preapproved and how to get a mortgage preapproval.
Mortgage preapproval is the process of determining how much money you can borrow to buy a home. During the mortgage preapproval process, lenders like Rocket Mortgage ® look at your income, assets and credit score. This information determines what loans you could be approved for, how much you can borrow and what your interest rate might be .
Preapproval and prequalification are both ways of understanding the loan amount you’ll be able to get approved for. There are some slight differences between these two processes, though some lenders use these terms interchangeably.
A mortgage prequalification is like a preapproval, but it may not be as accurate. With a prequalification, you won’t have to provide as much financial information, and your lender won’t pull your credit.
Without your credit report, your lender can only give you rough estimates. This means the approval amount, loan program and interest rate might change as the lender gets more information. Because a prequalification is an initial review of your finances, you usually don’t need to supply documentation (like bank statements and pay stubs) during this stage.
Preapprovals are more in-depth than prequalifications. When you get preapproved, you may be required to provide information or documents. These might include bank statements and pay stubs. A preapproval will also require a hard credit check so your lender can see your credit score and other debt.
Typically, you can apply for both a mortgage preapproval and a mortgage prequalification online.