In getting preapproved for a mortgage before entering the market, you will have a lot of the leg work completed before you even start looking at homes. Preapprovals are different than prequalification in that they take a much deeper look at your financials (application, income verification, supporting documents, etc.) and are conducted by the person who will actually underwrite your loan.
Know what you are qualified for
Knowing the amount of money are able to borrow prior to completing your home search will save you time and frustration. You don’t want to get out on the market and fall in love with a home just to learn that you are unable to get approved for the asking price.
Know what your budget is
Along the same lines as knowing what you qualify for, the preapproval will help you set your budget. As you probably know, just because you qualify for a high loan amount does not mean you can afford it. You more than likely have certain goals, additional obligations, and a comfort level when it pertains to how much of your income you want going to your mortgage.
Knowing what your monthly payments will be for an amount borrowed will ensure you set a reasonable budget, preventing you from over extending yourself.
Credit evaluation and game plan
If during the preapproval process you identify some hurdles that you need to overcome to purchase a home, it is best to learn this information as early as possible. You can work with your lender and realtor to work out a game plan to rectify each issue and get on your way to purchasing your next home.