shopping for home loan
Mortgage Prequalification vs. Preapproval
A mortgage lender can either prequalify or preapprove you. Do you know the difference? When you prequalify for a mortgage:
The lender simply gives you an estimate of what you can afford.
The lender promises to provide you with home financing up to a specific amount.
The lender places a prequalified amount of money in escrow to cover your down payment.
The correct answer is "A". Preapproval is preferable, because it includes a formal commitment. When you're preapproved, the lender agrees to supply you with home financing up to a set amount, as long as no major financial setbacks or problems with the property arise.