If you are an American veteran looking to buy a home, one thing you will probably need if you want to buy a house is a VA mortgage loan. A mortgage loan gives you the ability to buy a house today and pay for it over the next 20 to 40 years, and this makes buying a house a lot easier than saving up money to pay cash for a home. A VA mortage loan is a loan for veterans and current military members, protected by the United States Department of Veteran Affairs.
If you want to buy a house and need a loan, you should understand the difference between getting prequalified for a loan and preapproved for a VA loan first.
What it means to prequalify for a loan
When you hear the phrase prequalification, it basically means that you have spoken with a lender about getting a loan and based on what you told the lender, you should have no problem getting a loan. Getting prequalified simply involves having a conversation. It does not involve submitting an application or paperwork, and it does not involve running your credit or looking into your finances. It is simply a conversation about the basic conditions and requirements for a loan.
What it means to get preapproved for a loan
Getting preapproved, though, is different. When you get a letter that tells you the lender has preapproved your application, it means you have filled out an application. It means you have submitted documents to prove your income, finances, and job. It also means that the lender has evaluated your credit. Preapproval is a much more in-depth process that gives you a more accurate answer as to whether you qualify for a loan or not.
Why both are important when buying a house
Getting prequalified is a good step to take months before you would even like to buy a house, simply because it will help you know if you need to take steps before you apply. You might find out in this stage that you could qualify for a loan if you pay off some of your debt. Getting preapproved is important, though, as your real estate agent will want to make sure that you have completed this step and that you are eligible for a loan.
If you are currently in the planning stages of buying a house and would like to find out if you will be able to get a loan, you should contact a mortgage lender of your choice to learn more about the prequalification process and preapproval process.