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What are the advantages of mortgage preapproval?

Posted on Friday, June 8, 2012 at 6:28:10 PM

If you are on the market for a new home, there are a number of steps to take to make sure your finances are in order. Many potential homeowners may find mortgage preapprovals an ideal way to budget accordingly for the eventual purchase of a property.

A mortgage preapproval is something you can get from one or multiple lenders to show home sellers that you are approved for a mortgage before you even select a property. The mortgage lender uses your credit score and evaluates your financial situation to determine how much credit you could take out.

While the resulting figures are not concrete, it is a ballpark figure that can help you negotiate for a home if you encounter a bidding war or need negotiating power. In addition, this home financing preparation option allows you to create a budget and determine how much you can comfortably spend on monthly mortgage payments.