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Two closely related terms in the mortgage lexicon are often confused by first time owners and seasoned buyers and sellers alike--preapproval and prequalification.
If you find yourself considering buying a house for the first time, and you haven't found a REALTOR® but you also haven't really assessed your home-buying potential, you might consider applying for prequalification.
With prequalification, your lender does a preliminary evaluation of your ability to pay for a home, providing an estimate of your mortgage amount.
If you are deep into your home search and have been working with a REALTOR® or lender, or you are buying your second house, or you are just ready to buy, you should consider preapproval. With preapproval, your lender does a thorough evaluation of your ability to pay for a home, and can provide you with written confirmation of the mortgage amount.
Coming to the table with preapproval from your lender demonstrates to the seller that you are committed to buying, and can give you an advantage over other buyers.
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