Why You Might Want to Get Preapproved for a Home Loan

When in the market for a home, preapproval on a mortgage can help you get into a new place quicker and give you a leg up against other buyers.
By: Jane J. Kim: The Wall Street Journal Online
Question: What advantages are there in having a preapproved mortgage?

- Kevin Timm, Sterling Heights, Mich.

Answer: By getting preapproved for a loan, the lender will give you an estimate of how much you can borrow and what interest rate you might qualify for. The process also gives buyers more leverage with sellers who are likely to prefer buyers who have already been assured of getting a loan. Buyers can also speed up their loan closings more quickly, typically by a week or two, says Deborah McNaughton, president of Professional Credit Counselors of Brea, Calif. Getting preapproved is different from getting prequalified for a loan. With a prequalification, a lender will give you an estimate of how much you can afford to borrow based on information you provide. A preapproval is a firmer commitment on the part of the lender, which verifies key information provided, to make a loan.